An Indian stock trader monitors share prices on his terminal at a brokerage house in Mumbai. The Sensex lost 0.2% to 28,236.39 points at the close yesterday, after changing directions at least 15 times.

Bloomberg/Mumbai

Indian stocks declined, paring a weekly advance, as the nation’s biggest power-equipment maker plunged on profit that fell short of estimates.
Bharat Heavy Electricals tumbled the most since May, while Coal India, the largest producer of the fuel, had its biggest drop since January. State Bank of India, the nation’s biggest lender, fell the most in two months. Tata Motors, owner of Jaguar Land Rover, rallied before its quarterly earnings.
The Sensex lost 0.2% to 28,236.39 at the close in Mumbai, after changing directions at least 15 times. The gauge rose 0.4% this week, after overseas investors bought $234mn of stocks through Wednesday.
“We saw some stock-specific actions based on news flow,” Vaibhav Sanghavi, managing director at Ambit Investment Advisors Pvt in Mumbai, said by phone. “Local fund flows have been strong, giving support.’’
Domestic investors poured Rs58.4bn ($915mn) into local funds in July, extending this fiscal year’s inflows to Rs381bn, data from the Association of Mutual Funds of India showed. In the same period last year the inflow was Rs207.8bn.
Sanghavi said his funds are long on financials and short on commodities.
He also likes shares of industrials, consumer discretionary and automakers.
Indian equities have received $1.1bn in foreign inflows since July 1, the only Asian market tracked by Bloomberg to see net purchases during the period. Reserve Bank of India Governor Raghuram Rajan on Tuesday left interest rates unchanged, saying he wants to ensure his inflation target of 6% by January isn’t at risk.
CLSA Asia-Pacific Markets increased India’s “already substantial overweight” by 2 percentage points while cutting China’s, chief equity strategist Christopher Wood wrote in his Greed & Fear report yesterday, citing the government’s plan to re-capitalise state-run banks.
Bharat Heavy Electricals reported first quarter net income of Rs338.9mn, missing the Rs2.1bn estimated by analysts. Sales at Rs42.8bn also missed the estimated Rs52.8bn. The shares plunged 5.8%, the most since May 6.
Mahindra & Mahindra, India’s largest maker of utility vehicles and tractors, decreased 0.5%. The company’s first quarter sales missed estimates. Net income fell 3.4% to Rs8.52bn, beating the Rs7.4bn estimated by analysts.
Shares of Tata Motors, which reported earnings after trading hours, rose 2.7%, the most since July 23. Profit missed estimates as demand for Jaguar Land Rover vehicles slumped in China amid a slowdown. Net income halved to Rs27.7bn from Rs54bn a year earlier, trailing the Rs31.4bn median of 31 analysts’ estimates compiled by Bloomberg.
Profit at the Jaguar Land Rover unit declined to £492mn ($764mn) from £693mn.Fifteen of the 23 Sensex companies, or 65%, that have posted results for the June quarter have matched or exceeded estimates, versus 40% in the March quarter.
Coal India declined 3.9%, paring this year’s gains to 8%. State Bank lost 2.7%, the most since June 3.
The Sensex has risen 2.7% and trades at 15.8 times projected 12-month earnings, compared with a multiple of 11.2 for the MSCI Emerging Markets Index.
Meanwhile the rupee fell 0.1% yesterday. Government bonds were steady.
The rupee rose the most in Asia this week on speculation policy makers will ease curbs to allow global funds to buy more of the nation’s debt. Sovereign bonds need to have an open, and not a captive market, and the Reserve Bank of India is talking to the government about limits on foreign portfolio investments in debt securities, Governor Raghuram Rajan said Tuesday.
Overseas investors added Rs9.26bn ($145mn) to their holdings of rupee-denominated corporate and government notes so far this week, besides buying $278.3mn of shares.
The rupee climbed 0.5% from July 31, the most since the five days ended June 19, to 63.8150 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg “The possibility of higher foreign investment was a major sentiment driver,” said Rohan Lasrado, head of foreign-exchange trading at RBL Bank in Mumbai. “The rupee is now more resilient to global volatility and inflows have remained strong.”
One-month implied volatility in the rupee, a gauge of expected swings used to price options, dropped 33 basis points from July 31, snapping a two-week advance, to 5.68%, data compiled by Bloomberg show.
India has capped overseas holdings of sovereign debt at $30bn, seeking to shield local markets from any capital outflows due to global events such as the Federal Reserve raising US interest rates.
The 10-year yield was little changed for the week and from Thursday at 7.81%, according to prices from the central bank’s trading system. That’s after the RBI refrained from adding to this year’s three interest-rate cuts on Tuesday.