Indian stocks declined, with the benchmark gauge set to halt the longest run of weekly advance in more than two years, as lenders and industrials retreated.
Housing Development Finance Corp. (HDFC), the largest mortgage lender, dropped the most in three weeks. Coal India Ltd., the world’s biggest miner of the fuel, declined for a second day. State Bank of India decreased for a fourth day. The rupee weakened 1.1 percent this week, the steepest loss since Aug. 1.
The S&P BSE Sensex (SENSEX) slid 0.7 percent to 26,294.48 at 12:51 p.m. in Mumbai. The gauge has dropped 3 percent this week, on course for its first weekly fall in seven weeks, amid concern a Supreme Court decision to cancel coal-mining permits may deal a blow to early signs of an economic recovery. Coal generates 60 percent of India’s power and is key for Prime Minister Narendra Modi’s pledge of uninterrupted electricity supply by 2022.
“The court verdict has dented sentiments in a significant way and raises concerns about the uncertainty of the business environment,” Sanjay Sinha, founder of Citrus Advisors Pvt., said in an interview today. “We don’t think the correction in the market is fully done.”
The Supreme Court on Sept. 24 canceled 98 percent of the coal-mine permits granted to companies such as Jindal Steel & Power Ltd. and Hindalco Industries Ltd. (HNDL) since 1993, after declaring the allocations illegal on Aug. 25. Some of the mines may go up for auction and the current owners will either have to rebid or buy source coal from abroad. Imports may widen India’s trade gap to from $ 10.8 billion in August, after it shrank from $ 12.2 billion in July.
Jindal Steel declined to the lowest since March 2009 after losing 18 percent of its value this week. State Bank lost 0.6 percent, taking the week’s drop to 8 percent. The lender’s 42 billion rupees in loans to power and metal companies will be affected by the cancellation in mine permits, Managing Director Pradeep Kumar said yesterday.
Power-equipment maker Bharat Heavy Electricals Ltd. (BHEL) slid for a sixth day, extending this week’s loss to 11 percent, the worst performance on the Sensex.
Sun Pharmaceutical Industries Ltd. (SUNP), India’s most valuable drugmaker, jumped 4.3 percent, the best performer.
The Sensex trades at 15.2 times projected 12-month profits, versus with the MSCI Emerging Markets Index’s multiple of 10.8. It has risen 25 percent this year and is the best performer among the world’s biggest markets.
Foreigners sold a net $ 113 million of stocks on Sept. 24, paring this year’s inflows to $ 13.9 billion, still the highest among eight Asian markets tracked by Bloomberg.
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