Bloomberg
Mumbai


India’s benchmark stock index dropped after its steepest rally in three months as the rupee approached a two-year low amid a slump in the nation’s exports.
Cipla, one the country’s four biggest pharmaceutical companies, slid from a record. Vedanta and Hindalco Industries, the top copper and aluminium makers, declined at least 2%. Reliance Industries lost 1.7% and Oil & Natural Gas Corp plunged to a two-year low.
The S&P BSE Sensex lost 0.7% to 27,878.27 at the close in Mumbai. The gauge on Friday capped its biggest two-day gain in more than a month after the nation’s two main inflation gauges slowed more than estimated, bolstering expectations of a cut in interest rates. Exports dropped for an eighth month, the longest stretch since 2009, official data showed after market hours on Friday. “Some investors are taking money off the table after the superb rally on Friday,” Alex Mathews, the head of research at Geojit BNP Paribas Financial Services, said by phone from Kollam in the southern state of Kerala. “The rupee is down and that’s not helping.”
India’s trade gap widened to $12.8bn last month as exports fell 10.3% from a year earlier, data showed. “The mood is cautious as there are concerns that yuan may be devalued more,” said Mathews.
Cipla tumbled 4.9% in the worst performance on the Sensex yesterday. First-quarter net income more than doubled to Rs6.51bn ($100mn), beating the Rs4.25bn estimate, the company said after market hours on Friday.
Quarterly earnings at 18 of the 30 Sensex companies, or 60%, matched or beat estimates in the June quarter, versus 40% in the March quarter.
Vedanta tumbled 2% and Hindalco lost 2.7%. Reliance slid 1.7%, while Oil & Natural Gas dropped 2.4% to its lowest level since October 2013.
Bank of Baroda soared 15% to a six-month high after the government said after trading ended on Friday that it would inject $3.1bn into state-run banks. Canara Bank rose 13%, the most since May 2009, while Bank of India soared 9.1%, the most since October 2013.
International investors sold a net $76mn of Indian stocks on August 13, paring this year’s inflows to $6.9bn.
The Sensex has increased 1.4% this year and trades at 15.7 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.
Meanwhile the rupee fell to its weakest level in two years as a slump in exports drove the nation’s trade deficit to an eight-month high.
The shortfall reached $12.8bn in July as overseas shipments dropped 10.3% from a year earlier, official figures showed after the close of trading on Friday. Exports slipped for an eighth month, the longest run of declines since 2009.
China’s surprise yuan devaluation last week reignited concern of a regional currency war as Vietnam widened the dong’s trading band.
The rupee weakened 0.5% to 65.3125 a dollar at close in Mumbai yesterday, according to prices from local banks compiled by Bloomberg. The currency slid to 65.3750 in intraday trading, its lowest level since September 2013. Sovereign bonds were steady yesterday while the benchmark S&P BSE Sensex index of shares lost 0.7%.
“The wider trade deficit is a matter of concern,” said Naveen Raghuvanshi, a Mumbai-based currency trader at DCB Bank. “Broad gains in the dollar and losses in local equities are also weighing on the rupee.”
The Bloomberg Dollar Spot Index advanced for a third day. A report on US manufacturing yesterday may offer clues on the timing of the Federal Reserve’s first interest-rate increase since 2006.
Weak exports continue to offset relief from a lower commodity imports bill for India, DBS Bank Ltd economists, including Singapore-based Radhika Rao, wrote in a report.
The yield on government notes due May 2025 was little changed from Friday at 7.74%, according to the Reserve Bank of India’s trading system.