Indian stocks declined for the first time this week as the quarterly results of the nation’s second-biggest software exporter disappointed investors.
Infosys tumbled the most since April 2013 after paring its annual sales outlook. Tata Consultancy Services (TCS), Asia’s largest technology exporter, decreased the most in five months. Coal India Ltd, the world’s largest miner of the fuel, and power generator NTPC both fell for a second day this week. Reliance Industries (RIL), owner of the world’s largest refining complex, rose before its earnings report due after market hours.
The S&P BSE Sensex decreased 0.38%, or 105.61 points, to 27,836.50 at the close, paring the weekly advance to 2.6%. Nifty 50 closes 0.28%, or 23.60 points, lower at 8,541.40.
Investor are focusing on the June-quarter results season, which got underway on Thursday, for signs that the rally that pushed up the gauge’s valuation to near a five-year high this week are supported by company earnings.
“Company earnings will be looked at with a magnifying glass as the belief that there’s a recovery has been high after the last quarter,” Sadanand Shetty, a senior fund manager at Taurus Asset Management Co, which has $476mn, said by phone from Mumbai. “Management guidance is very important and if there’s a massive disappointment the stock will get punished.”
The Sensex entered a bull market on Monday, rebounding 21% from a low reached in February, helped by forecasts for above-normal rain after back-to-back droughts and a recovery in company earnings. Operating profits for companies in the NSE Nifty 50 Index rose about 10% in the three months ended March, the most since September 2014, reversing declines in four of the previous five periods, data compiled by Bloomberg show.
Infosys tumbled 8.81% to its lowest level since January 12after the company predicted 10.8% to 12.3% growth in US dollar terms in the year to March, down from a previous range of 11.8% to 13.8%. The company also reported first-quarter sales that lagged estimates.
TCS, which kicked off the reporting season Thursday, fell 3%, ending a four-day advance. Net income increased to Rs6,320 crore in the three months ended June, the Mumbai-based company said after trading ended. The results beat the Rs6,060 crore mean of estimates compiled by Bloomberg. The company does not provide a sales guidance. Wipro, the third biggest, slid 2.81%.
Meanwhile the rupee weakened against the US dollar yesterday after local equity markets fell over 100 points, while the 10-year bond yield fell to a fresh three-year low as hopes of a normal monsoon and a dovish central bank governor renewed expectations of further rate cuts.
The currency closed at 67.07, down 0.2% from its previous close of 66.91. The local currency opened at 66.88 a dollar and touched a high and a low of 66.85 and 67.13, respectively, in intraday trade.
Asian currencies closed mixed. Philippines peso was up 0.59%, Taiwan dollar 0.49%, South Korean won 0.37% and Thai baht 0.29%. However, Japanese yen was down 0.43%, Indonesian rupiah 0.18%, Singapore dollar 0.12%.
India’s 10-year bond yield closed at 7.272%—a level last seen on 17 June 2013— compared with Thursday’s close of 7.285%.
So far this year, the rupee is down 1.3%, while foreign institutional investors have bought $3.27bn in equity markets and sold $1.12bn in debt markets. The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.977, down 0.11% from its previous close of 96.077.