Indian stocks declined, with the benchmark index erasing a weekly advance, as some investors judged the recent rally to a record to be excessive.
HDFC Bank Ltd. (HDFCB) fell the most in a month after the nation’s largest lender by value was removed from the MSCI India Index. Hero MotoCorp Ltd. was the worst performer on the S&P BSE Sensex (SENSEX) after Bain Capital was said to have sold shares in the motorcycle maker. Mahindra & Mahindra Ltd. (MM) slid for a third day.
The Sensex lost 0.5 percent to 27,786.19 at 11:45 a.m. in Mumbai, taking the weekly decline to 0.5 percent and ending two straight weeks of advances. The gauge rose to an all-time high on Nov. 5, sending the 14-day relative strength index to 72. Some investors see readings above 70 as a signal to sell. The market was closed yesterday for a holiday.
“The run-up has been very fast and the index is trading in an overbought zone,” D.K. Aggarwal, chairman of SMC Investments & Advisors Ltd., said in a phone interview from New Delhi. “We can see some consolidation and profit booking.”
HDFC Bank fell 1.8 percent, trimming this year’s gains to 35 percent. State Bank of India slid 1.3 percent.
Motherson Sumi Systems Ltd. (MSS), an autoparts maker, advanced 1.9 percent, while Zee Entertainment Enterprises Ltd. (Z) rallied 2.4 percent after MSCI Inc. said yesterday the two companies will be added to the MSCI India Index from the close of trading on Nov. 25.
Jaiprakash Associates Ltd. declined 0.8 percent, Reliance Capital Ltd. lost 1.4 percent and Reliance Power Ltd. fell 1.6 percent after being deleted from the India gauge.
Hero MotoCorp tumbled 2.3 percent, taking this week’s loss to 5.5 percent. Bain Capital Partners sold 8.56 million shares at 2,875 rupees each, a person with knowledge of the matter said. Bain Capital owned 5.77 percent stake in Hero through BC India Pvt Investors II, data compiled by Bloomberg show.
Colgate, Tata Global
Ashok Leyland Ltd. (AL), a truckmaker, gained 1.8 percent, set for a fifth day of gains. The company’s second-quarter profit of 1.21 billion rupees ($ 19.7 million) exceeded the median analyst estimate of 205 million rupees.
Colgate-Palmolive India Ltd. (CLGT) posted profit of 1.3 billion rupees, in line with forecasts. The shares added 1.5 percent.
Tata Global Beverages Ltd. (TGBL), owner of the Tetley brand, reported group profit of 624.5 million rupees, missing the median analyst estimate of 945 million rupees. The shares lost 1.3 percent.
Larsen & Toubro Ltd. (LT), India’s largest engineering company, may report today that profit fell 2 percent from a year earlier to 9.56 billion rupees in the quarter ended Sept. 30, according to the median estimate of 29 analysts in a Bloomberg survey. The shares declined 0.9 percent.
Earnings Scorecard
Fifteen of the 19 Sensex members that have posted results so far have beaten or matched estimates. Earnings of companies on the gauge are likely to expand 23 percent over the next 12 months, versus 15 percent for companies on the MSCI Emerging Markets Index, data compiled by Bloomberg show.
International investors bought a net $ 238 million of local shares on Nov. 3, taking this year’s inflow to $ 14.2 billion, the most among eight Asian markets tracked by Bloomberg.
The Sensex has risen 31 percent this year, the best performer among the world’s 40 biggest markets, and trades at 15.5 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.8.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Ravil Shirodkar, Phani Varahabhotla