Indian stocks fell for a second day this week after the benchmark gauge posted its biggest advance in five months.
Lenders and automakers declined as investors exited recent outperformers, while health-care companies and power utilities saw continued buying interest. The index of small-cap companies climbed to a fresh record.
The S&P BSE Sensex erased an intraday gain of 0.3% amid below-average volumes.
The measure jumped 1.9% on Tuesday, the steepest climb among Asian gauges, as global funds turned net buyers of local shares for the first time in five days and speculation grew that the Federal Reserve will boost interest rates in December then not rush further increases as the US economy remains mixed.
The BSE Sensex fell 66.51 points to close at 27,984.37 and Nifty closed down 18.80 points, or 0.22%, at 8,659.10
“After such a big move yesterday, the market is taking a breather,” Rudramurthy BV, head of research at Vachana Investments, said by phone from Bengaluru. “The rally was due to short covering and buying from foreign and local institutions. Any decline from current levels is a good opportunity to buy.” He is advising investors to buy lenders, automakers and oil companies.
Global funds bought $56mn of local stocks on Tuesday. That followed withdrawals of $374mn in the previous four days, the longest stretch of outflows in more than three weeks. Local institutional investors bought net 1.73bn of rupees of stocks, extending five days of purchases, data compiled by Bloomberg show.
Investors are also focused on the ongoing earnings season for clues if growth in profitability can justify the high valuations. Infosys and Tata Consultancy Services, India’s top software exporters, last week reported disappointing earnings outlook. Reliance Industries, owner of the world’s largest refining complex, and Yes Bank are scheduled to announce their results today.
The Sensex trades at 16.4 times projected 12-month earnings, compared with a five-year average of 14.3 times. The MSCI Emerging Markets Index is valued at 12.5 times.
Endurance Technologies climbed 37% in its trading debut. Logistics companies rallied as the government is set to announce the rates for a Goods and Services Tax, or GST.
Gati capped its biggest two-day jump since June, while Snowman Logistics advanced 3.3%, extending Tuesday’s 6% surge. VRL Logistics added 3.1%. ITC lost 2.6%, the steepest decline in two months, amid reports the GST panel is considering having multiple tax slabs along with a so-called sin tax on demerit goods such as tobacco and luxury products. ITC has the fourth- highest weighting on the Sensex. ICICI Bank declined 2% after rallying 12% over the past two days.
Fertiliser stocks rallied on expectations that gas pooling will benefit manufacturers and as sentiment for the industry improved before the government’s planned stake sale in National Fertilizers. Chambal Fertilizers and Chemicals surged 9.1%, while Gujarat Narmada Valley Fertilizers & Chemicals rose 8.8%. Deepak Fertilisers & Petrochemicals Corp advanced 7.1%. Rashtriya Chemicals & Fertilizers climbed 6.9%.
Wipro rose to its highest level since August 25 ahead of its earnings on Friday. Meanwhile the rupee yesterday closed marginally stronger against the US dollar tracking the gains in the Asian currencies markets.
The rupee closed at 66.68 against the US dollar, up 0.07% from its previous close of 66.73. The home currency opened at 66.69 a dollar. So far this year, it fell 0.85%. Most Asian currencies closed higher following government data that showed the Chinese economy grew in line with expectations for the July-September quarter.
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South Korean won was up 0.56%, Japanese yen 0.51%, Philippines peso 0.4%, Thai baht 0.4%, Malaysian ringgit 0.19%, Indonesian rupiah 0.13%, Chinese yuan 0.07%, Taiwan dollar 0.06%. However, Singapore dollar was down 0.08%.
The benchmark 10-year government bond yield closed at 6.732% compared to Tuesday’s close of 6.722%. Bond yields and prices move in opposite directions.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 97.76, down 0.13% from its previous close of 97.895.