Saturday 11 / May / 2024
Mumbai: Indian stocks dropped, led by lenders, in a volatile trading session that saw the benchmark index change direction at least 15 times before the central bank prepared to review interest rates.
ICICI Bank, the country’s biggest private lender, plunged the most in five months. State Bank of India, the biggest lender, dropped to its lowest level in almost two years. Maruti Suzuki India, the maker of half the cars sold in India, slid the most in a week after sales fell in January. Larsen & Toubro, the largest engineering company, climbed after saying it doesn’t expect a slowdown in orders in the year through March.
The Sensex fell 0.2 per cent to 24,824.83 at the close in Mumbai. The gauge capped its first weekly gain in four on Friday as the Bank of Japan’s negative interest-rate strategy added to confidence that major central banks remain supportive of growth. Reserve Bank of India (RBI) Governor Raghuram Rajan is expected to leave interest rates unchanged at a five-year low on Tuesday after four reductions in 2015.
"At this point everybody is unclear which way the markets are going globally," Prashasta Seth, chief executive officer at India Infoline Asset Management, which has $620 million in assets, said in an interview to Bloomberg TV India. "It’s very unlikely that the RBI would do anything given the choppiness all around. We expect a status quo. What we would look for is their commentary on inflation and their prognosis on the economy."
Rate expectations
Thirty-eight of 40 economists in a Bloomberg survey predict Rajan will leave the benchmark repurchase rate at 6.75 per cent, while two see a cut to 6.5 per cent. Twenty-seven of 28 economists in a separate Bloomberg survey also predict he will keep banks’ cash reserve ratio at four per cent on Tuesday, compared with a call for a 50-basis point cut from Goldman Sachs Group economist Tushar Poddar.
Banks in India are grappling with rising bad loans amid the highest stressed-debt ratio in at least 14 years. The central bank has set a March 2017 deadline to help bolster balance sheets by increasing provisions.
ICICI Bank tumbled 5.6 per cent, the most since August 24, after reporting last week the slowest quarterly profit growth in six years as bad loans surged. State Bank fell four per cent to its lowest level since March 2014. Axis Bank lost 2.2 per cent.
Maruti sales
Maruti slid 3.6 per cent, extending this year’s loss to 15 per cent. The stock was the best performer last year on the Sensex with a 39 percent rally. Its January sales fell 2.6 per cent.
Larsen & Toubro gained 1.9 per cent. The company said after market hours Friday it expects orders to grow 10 per cent to 15 per cent in the next financial year. In the September quarter, the company had scaled down its annual guidance to a five per cent to seven per cent growth. Its third-quarter profit of Rs10.3 billion matched analyst estimates.
Eight of the 15 Sensex firms that have reported December-quarter results so far have beaten or matched estimates, versus 57 per cent in the three months ended September and 60 per cent in June, data compiled by Bloomberg show.
SpiceJet surged 3.1 per cent after aviation fuel prices were cut 13 per cent. Jet Airways India gained 0.6 per cent. InterGlobe Aviation, which runs the biggest carrier Indigo, rose 0.8 per cent.
The Sensex fell 4.8 per cent in January, its worst start to the year since 2011, after foreigners sold $1.8 billion of local stocks last month through Thursday.
