Saturday 19 January 2008

India Sensex Has Biggest Weekly Drop in 20 Months

India's Sensitive Index posted its biggest weekly drop in 20 months as a faltering U.S. economy prompted overseas investors to turn sellers. Reliance Industries Ltd. and ICICI Bank Ltd. lead declines.

``This is purely selling by foreign institutional investors on weak trends in the global markets,'' said Rahul Jain, head of institutional sales at Prabhudas Lilladher Securities. ``The Indian market had not fallen as much as other markets in the world. Stocks which had outperformed in the last 10 days have been thrashed the most.''

The Bombay Stock Exchange's Sensex dropped 687.12 points, or 3.5 percent, to 19,013.70, its lowest since Nov. 29. The index fell for all five trading days, its first weekly fall in four weeks. Its 8.7 percent loss this week was the biggest since the five days ended May 19, 2006. The gauge of 30 companies has fallen 10 percent from the record 21,206.7 on Jan. 10.

All 13 industry indexes on the Bombay Stock Exchange fell by between 1.6 percent and 5.9 percent. About seven stocks declined for every one that rose on the exchange. The S&P CNX Nifty on the National Stock Exchange fell 207.9, or 3.5 percent, to 5,705.30.

Foreign institutional investors sold a net 3.27 billion rupees ($83 million) of Indian equity derivatives yesterday, according to the National Stock Exchange. Overseas investors sold a net 22.8 billion rupees of shares on Jan. 16, according to the nation's stock market regulator.

Reliance, Wipro

Reliance Industries, the nation's most valuable company, dropped 196.75 rupees, or 6.6 percent, to 2,799.5, its lowest since Dec. 24. Today's drop was the biggest since June 8, 2006.

Wipro Ltd., India's third-largest exporter of software services, fell after third-quarter profit grew the slowest in almost three years, trailing analysts' estimates. Some state-run refiners declined after an Indian government panel failed to take a decision on domestic fuel prices when global crude is trading near a record.

ICICI Bank, the nation's most valuable bank, fell 76.35 rupees, or 5.8 percent, to 1,245.45, its biggest percentage decline since Oct. 18. The stock has gained 1.1 percent so far this year. Reliance Energy Ltd., the nation's second most valuable electricity producer, declined 88.65 rupees, or 4 percent, to 2,124.05. Unit Reliance Power Ltd.'s $3 billion initial public offering, India's largest, closed today.

Wipro said net income rose 11 percent to 8.26 billion rupees, missing the 8.62 billion rupee median estimate of 11 analysts surveyed by Bloomberg, after the rupee's gain curbed earnings in the U.S., the main market for Indian software exporters. Wipro fell 5.1 rupees, or 1.1 percent, to 455.35.

Ranbaxy, Fuel Prices

``The outlook for the industry will remain hazy until we get a clearer picture on the state of the U.S. economy,'' said Soumendra Nath Lahiri, who helps manage the equivalent of $3.9 billion of stocks at DSP Merrill Lynch Investment Management in Mumbai. ``Earnings have been decent considering the fact that the sector hasn't had the greatest run.''

Ranbaxy Laboratories Ltd. had its biggest rise in 20 months in Mumbai trading after forecasting profit will grow 25 percent this year. Chief Executive Officer Malvinder Singh said yesterday net income may rise from 7.9 billion rupees in the 12 months ended Dec. 31, driven by higher sales of treatments for infections, diabetes and AIDS in emerging markets.

Ranbaxy rose 18.75 rupees, or 5.1 percent, to 386.65. It earlier rose as much as 10 percent.

The Indian government panel's postponement of a decision on fuel prices may widen losses at Indian Oil Corp. and other state- run refiners after crude oil costs rose to a record. The panel may meet again in two days, Petroleum Minister Murli Deora told reporters in New Delhi.

Indian Oil fell 49.75 rupees, or 7.6 percent, to 607, its biggest drop in about two months. Hindustan Petroleum Corp. declined 18.95 rupees, or 5.7 percent, to 310.95.

The following stocks fell. Stock symbols are in parentheses after company names:

Oil & Natural Gas Corp. (ONGC IN) fell 41.65 rupees, or 3.3 percent, to 1,209.45. A unit of the state-run explorer may sign a deal with Iran's Petropars Ltd. to buy a stake in the Kish oil block, the Economic Times reported, citing unidentified people.

HCL Technologies Ltd. (HCLT IN) fell 1.6 rupees, or 0.6 percent, to 266. The computer-services provider controlled by billionaire Shiv Nadar reported a 16 percent gain in second- quarter profit as sales to financial and telecommunications companies rose. Net income increased to 3.32 billion rupees in the three months ended Dec. 31, HCL Technologies said in a statement yesterday. That beat the 3.17 billion rupee median estimate of 13 analysts surveyed by Bloomberg.