Indian stocks trimmed the biggest weekly gain in almost a month before a US jobs report as declines in software exporters and telecom companies offset increases in metal shares.
The BSE Sensex fell 45.07 points to end at 28,061.14 and Nifty fell 11.95 points to close at 8,697.60
About three shares fell for every two that climbed on the S&P BSE Sensex, which changed direction at least seven times. The gauge is up 0.5% for the week, rebounding from a 2.8% drop in the previous five days, which was the steepest since February following India’s attacks on militants in Pakistan. Foreign investors kept faith in the nation’s equities, buying $245mn this week, adding to the $1.4bn they purchased in September.
“The markets will trade in a range in the near term as there as too many uncertainties such as the Fed rates, US presidential elections and the corporate earnings season,” RK Gupta, managing director at Taurus Asset Management Co, which has $480mn in assets, said by phone from New Delhi. “At the same time, the liquidity is very strong. So every fall is being bought into aggressively.”
Stocks were buoyed earlier this week by the central bank’s move to ease borrowing costs. The six-member Monetary Policy Committee led by newly-appointed Reserve Bank of India Governor Urjit Patel took the country’s first collective interest-rate decision on Tuesday, moving to cut the main repurchase rate to a more than five-year low of 6.25%. That was after consumer-price inflation slowed to a five-month low in August.
The Sensex fell for a third day amid concern the Federal Reserve may raise rates this year. Odds that it will do so by December rose to 64% from 53% a week ago, ahead of the official labor report Friday.
Global investors are waiting for US economic reports to gauge the strength of the world’s biggest economy and watching for comments by Federal Reserve officials to assess the path of interest rates.
Overseas investors bought $54mn of local stocks on October 5, taking this year’s inflows to $7.8bn, data compiled by Bloomberg show. That’s more than double the $3.3bn they purchased in all of 2015. The Sensex is valued at 15.7 times projected 12-month earnings, while the MSCI Emerging Markets Index trades at a multiple of 12.5, data compiled by Bloomberg show.
“There is little bit of caution as valuations have run up,” said Ajay Srivastava, New Delhi-based managing director at Dimensions Consulting. “Traders are more circumspect than long-term investors, which is why you don’t see panic selling in the market. Investors are willing to wait for the long haul.”
Steelmakers rallied after the European Union imposed tariffs as high as 73.7% on two types of steel from China in a bid to curb competition for EU producers including ArcelorMittal and ThyssenKrupp.
Tata Steel, the biggest producer alloy which also has a unit in Europe, jumped 4.3% to its highest level since January 2015.
The stock has rallied 56% this year, the best performer on the Sensex. Steel Authority of India surged 4.2%.
Bharat Forge Ltd rose 2.8% to a one-year high after the stock was raised to buy from sell at CLSA Asia-Pacific Markets.
Tata Motors was among the top gainers on the Sensex after its Jaguar Land Rover sales in September jumped 28% from a year earlier.
Meanwhile the rupee strengthened against the US dollar. Rupee closed at 66.68 against the US dollar, up 0.02% from its previous close of 66.70. The home currency opened at 66.74 a dollar and touched a high of 66.68 and a low of 66.87.
The benchmark 10-year government bond yield closed at 6.735% compared to Thursday’s close of 6.696%. Bond yields and prices move in opposite directions.
The rupee is down 0.80% till date this year, while foreign institutional investors have bought $7.70bn in equity and sold $158.10mn in debt markets.
Most Asian currencies were trading lower. South Korean won was down 0.326%, Malaysian ringgit 0.229%, Singapore dollar lost 0.189%, Taiwan dollar fell 0.165%, Thai baht lost 0.129%, China renminbi 0.069%, China Offshore 0.025%, Indonesian rupiah 0.015% and Hong Kong Dollar lost 0.012%.
However, Japanese yen was up 0.270% and Philippines peso 0.056%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 97.002, up 0.24% from its previous close of 96.765.