Most Indian stocks dropped after the rupee declined the most in four weeks ahead of tomorrow’s U.S. presidential election.
The BSE India Sensitive Index (SENSEX), or Sensex, ended little changed at 18,762.87 at the close, with 17 of 30 stocks on the measure declining. Infosys Ltd. (INFO), the software exporter that got 64 percent of its revenue from North America in the year ended March, fell for the first time in six days. Aluminum producer Hindalco Industries Ltd. (HNDL), which will report earnings tomorrow, lost 2.7 percent as metal prices dropped in London.
U.S. voters will decide tomorrow between giving President Barack Obama another four years in office or changing course with Republican challenger Mitt Romney. Obama is leading Romney by 3 points, according to an Oct. 31-Nov. 3 Pew Research Center survey. India’s rupee lost 1.5 percent to 54.6075 per dollar, the most since Oct. 8, likely increasing the import bill and fueling inflation.
“There’s some caution as the U.S. election is one of the big global events,” Kaushik Dani, a fund manager at Peerless Mutual Fund, which has $886 million in assets, said by phone. “Indian markets would need fresh triggers to scale higher.”
The Sensex advanced 1 percent on Nov. 2, the steepest gain in six weeks, sending valuations to a 30 percent premium versus emerging-market peers. The gauge trades at 15 times estimated earnings, compared with a multiple of 11.4 times for the MSCI Emerging Markets Index (MXEF), data compiled by Bloomberg show.
Thirty-day volatility in the gauge was at 10.66, near the year’s lowest level of 10.04 reached on Sept. 11, the data show.
India’s rupee was the third-worst performer among 25 emerging-market currencies monitored by Bloomberg after the central bank cut its growth forecast last week. The new U.S. president will face unprecedented levels of debt and more than $600 billion in federal spending cuts and tax increases scheduled to take effect in January.
“If Obama wins, there is a likelihood of the dollar weakening, while a Romney victory would probably be bad for emerging-market currencies,” said Vikas Babu, a trader at state-run Andhra Bank in Mumbai. “We are going to have a volatile week.”
The Sensex has increased 21 percent this year, driven by overseas fund purchases and government policy reforms announced since mid-September to revive economic growth. Foreigners have bought a net $18.3 billion of local shares this year, the most among 10 Asian markets tracked by Bloomberg, excluding China.
Prime Minister Manmohan Singh started the biggest policy overhaul in a decade on Sept. 13, including fuel-subsidy curbs and a push to spur investment in domestic industries. Singh and the Congress party’s top leadership presented a united front for the reforms at a weekend gathering of tens of thousands of supporters. Opposition parties are threatening a no-confidence vote at the next session of parliament due to begin on Nov. 22.
Hindalco lost 2.7 percent to 114.5 rupees, its steepest decline since Oct. 8. Copper reached a two-month low in London, leading a drop among other metals. Jindal Steel & Power Ltd. (JSP) dropped 2.2 percent to 380.35 rupees and Tata Steel Ltd. (TATA) retreated 1.2 percent to 397.65 rupees.
Drugmaker Cipla Ltd. (CIPLA) reported its highest quarterly profit in at least 13 years. Net income surged 62 percent to 5 billion rupees for the September quarter, exceeding the 3.69-billion rupee median estimate in a Bloomberg survey of analysts. The stock advanced 0.9 percent to 380.2 rupees in a fourth day of gains before the results, which were announced after markets closed. Rival Dr. Reddy’s Laboratories Ltd. (DRRD) jumped 1.3 percent to 1,797.60 rupees, the highest level since April 19.
Out of the 20 Sensex companies that have reported earnings for the quarter ended September, just three have lagged behind analysts’ estimates. That compares with 40 percent of the index companies missing forecasts in the June quarter, data compiled by Bloomberg show.
The S&P CNX Nifty Index (NIFTY) rose 0.1 percent to 5,704.2. Its November futures settled at 5,739.65. India VIX, which gauges the cost of protection against losses in the Nifty, jumped 7.1 percent to 14.63. The National Stock Exchange of India and the BSE Ltd. traded 868 million shares on Nov. 2, compared with a 12-month daily average of 912 million.
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