Bharti Airtel Ltd., the country’s largest mobile services company, dropped 3.5 percent. Infosys Ltd., India’s second- biggest software exporter, fell the most in a month. Foreign funds pulled out $445 million from Indian equities in the eight days through Dec. 20, data from the Securities & Exchange Board of India show. Overseas investors have withdrawn $557 million this year, compared with a record inflow of $29.4 billion in 2010, contributing to a slide in the rupee to a record low.
The BSE India Sensitive Index, or Sensex, fell 0.4 percent to 15,626.18 at 1:55 p.m. in Mumbai. The measure had its steepest gain since Aug. 29 yesterday. The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. declined 0.3 percent, while the BSE 200 Index lost 0.3 percent.
“Foreign investors are bearish on India,” Tarun Kataria, chief executive officer of Religare Capital Markets Ltd., said in a Bloomberg UTV interview today. “India had this great chance to stand out in the world that is coming apart and it has shot itself in the foot. That is the refrain from overseas investors.”
International investors are boosting bets that the rupee will extend the worst slide since 2008 as an economic slump deepens, suggesting a lack of confidence in the central bank’s steps to curb exchange-rate volatility. India’s rupee fell the most in more than a week on concern Europe’s debt crisis will worsen, sapping demand for emerging-market assets.
‘Weakening Bias’
Bharti Airtel fell to 329.55 rupees after Press Trust of India reported, citing India’s Telecom Secretary R. Chandrasekhar as saying that India’s mobile-phone service providers have been asked to terminate agreements to provide 3G services in regions where they don’t have spectrum.
“Foreign flows, which are the driver that makes sure the currency gets a floor, are not there,” Religare’s Kataria said. “Therefore the weakening bias continues clearly, and the rupee may see 56” to the dollar, he said.
The currency dropped 0.5 percent to 52.765 at 10:49 a.m. in Mumbai, according to data compiled by Bloomberg, the biggest drop since Dec. 14. It lost 15 percent this year, the worst performance among Asian currencies, and reached an all-time low of 54.305 on Dec. 15.
“It’s risk-off again today,” said Sudarshan Bhatt, chief currency trader in Mumbai at state-owned Corporation Bank. “Europe’s debt problems may reduce capital inflows and we will also see some demand for dollars from importers to meet month- end payments.”
Policy Gridlock
Parliamentary gridlock, high inflation, a widening budget deficit and the weakest quarterly economic growth in two years have sent the currency tumbling 15 percent this year, hurting Indian companies that have a record $11.4 billion of dollar bonds to repay in 2012. The debt coming due next year is double the five-year average of $5.6 billion, data compiled by Bloomberg show.
A weak rupee boosts import prices in a country that imports 80 percent of its fuel and increases repayment costs for companies holding foreign-currency debt.
Shares of Infosys fell 1.4 percent to 2,703.8 rupees. The software provider yesterday surpassed Reliance Industries Ltd. as the biggest-weighted company in the Nifty. The rupee’s slump boosted the earnings outlook for a company that gets about 97 percent of its revenue from overseas.
Essar Charges
The Sensex has slumped 24 percent this year on concern a weak rupee, record interest-rate increases and accelerating inflation will worsen the effects of the European debt crisis on earnings. The gauge trades at 13.5 times future profits, down from 21.5 times in March 2010. The MSCI Emerging Markets Index is valued at 10 times.
Sterlite Industries (India) Ltd. dropped 0.7 percent to 90.55 rupees. Hindalco Industries Ltd. lost 2.4 percent to 120 rupees. The country’s leading copper producers got a 13 percent increase in ore-processing fees from Freeport-McMoRan Copper & Gold Inc. for next year, according to two people familiar with the agreement.
Essar Oil Ltd. fell 2.2 percent to 45.8 rupees after Special Judge O.P. Saini admitted charges filed by the Central Bureau of Investigation this month against Essar Group Vice Chairman Ravi Ruia and Directors Anshuman Ruia and Vikash Saraf for cheating and conspiring to provide incorrect information to the government while applying for permits to run mobile-phone services.
Sensex Earnings Forecast 2012
Earnings forecasts for Sensex companies for the year ending in March 2012 have fallen 7.9 percent to 1,160 rupees per share, the biggest drop since the 12 months ended March 2009, according to about 1,500 estimates compiled by Bloomberg. Analysts cut outlooks for Maruti Suzuki India Ltd., the country’s biggest carmaker, and Tata Steel Ltd., the largest producer of the alloy, by at least 29 percent, the data show.
“Foreign investors came into India because of growth, and they are pulling out as they aren’t convinced about it now,” Jagannadham Thunuguntla, chief strategist at SMC Wealth Management Services Ltd. in New Delhi, said in a phone interview today. “India’s growth story that was been talked about for the past five years appears to be just a story now.”
India’s economy grew 6.9 percent in the last quarter, the least in more than two years, and inflation has stayed above 9 percent all year even after seven interest-rate increases.
‘Stubborn’ Inflation
“With the Reserve Bank of India hamstrung by stubbornly strong non-food core inflation, a violent sell-off down to the 11,000-12,000 levels on the Sensex, combined with a further depreciation in the rupee to the 60-a-dollar level, now appears quite possible,” Christopher Wood, equity strategist at CLSA Asia-Pacific Markets, said in a note dated Dec 18.
Wholesale prices grew 9.11 percent in November, the 12th consecutive month inflation has remained at more than 9 percent, even as food-price growth slowed. Food inflation was at 4.35 percent in the week ended Dec. 3, the slowest since 2008. Data for the week ended Dec. 10 will be released today. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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