Lower forecasts of revenue and profit growth and higher interest rates pull down stocks.
Indian stocks declined, driving the benchmark index to its worst week in four months. Infosys Technologies led software exporters lower after Hewlett-Packard Co. cut its profit forecast. Infosys slid 2.6 percent as the recession saps demand for computers in the US, from which India’s software exporters derive more than half their revenue. Wipro declined 3.8 percent. ICICI Bank led lenders lower after Goldman Sachs Group Inc. said the government’s plan to borrow record amounts this fiscal year will drive up interest rates.
“Globally, news flows aren’t good and locally the government’s borrowing program will result in interest rates remaining high,” said Jayesh Shroff, who helps manage $1.9 billion in equities at SBI Asset Management Co. in Mumbai.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 2.2 percent to 8,843.21. The index dropped 8.2 percent this week, its biggest decline since the week ended October 24. The S&P CNX Nifty Index on the National Stock Exchange declined 1.9 percent to 2,736.45. The BSE 200 Index retreated 2.1 percent to 1,044.06. S&P CNX Nifty futures for February delivery dropped 1.8 percent to 2,735.
Futures on the Standard & Poor’s 500 Index dropped 0.9 percent. US stocks declined, sending the Dow Jones Industrial Average to a six-year low. Hewlett-Packard had its steepest tumble since August 2004 after the company lowered its operating profit forecast for the year to a range of $3.76 to $3.88 a share from an earlier range of $3.88 to $4.03.
ICICI, HDFC
Infosys, India’s second-biggest software exporter, slid 2.6 percent to Rs 1,177.15. Tata Consultancy Services, the nation’s largest software developer, fell 3.2 percent to Rs 474.05, its lowest since December 26. Wipro declined 2.3 percent to Rs 215.25.
ICICI dropped 7.1 percent to Rs 335.85, the lowest since December 3. Housing Development Finance Corp., India’s biggest mortgage lender, fell 2.9 percent to Rs 1,352.40, the lowest since November 25.
India’s consolidated fiscal deficit may rise to 10.3 percent of gross domestic product in the year to March 31 and 10 percent of GDP in the next year, Goldman Sachs said in a note to clients. The increase in the supply of government securities may not be accompanied by a similar increase in demand, and risk-free rates may rise, said Tushar Poddar, an analyst at Goldman Sachs. Overseas investors sold a net Rs 4.34 billion ($87.4 million) of Indian stocks yesterday, according to the nation’s market regulator. The following were among the most active shares traded on the Bombay and National stock exchanges.
ABB gained 1.6 percent to Rs 399.40. The Indian unit of the world’s biggest builder of electricity networks said fourth-quarter profit rose 7 percent as orders increased. Net income rose to Rs 1.93 billion in the three months ended December 31.
Areva T&D India fell 3.4 percent to Rs 181.65. The local unit of the world’s largest maker of nuclear reactors said fourth-quarter profit declined 34 percent on higher raw-material costs. Net income fell to Rs 552.4 million in the three months ended December 31.
Bharat Heavy Electricals fell 1.4 percent to Rs 1,364.10. India’s No. 1 power-equipment maker expects profit growth to slow to 10 percent in the year ending March 31, compared with 18 percent a year earlier on higher raw-material costs and wages, Chairman K Ravi Kumar said. The company is in talks with companies in Japan and Europe to make transformers of up to 1,200-kilovolt capacity and expects to sign a partnership accord by the year’s end, he said.
Educomp Solutions dropped 12 percent to Rs 1,772.20, extending yesterday’s 4.5 percent decline. India’s biggest computer training company by market value is under inspection, the government said. The ministry of company affairs ordered an inspection on February “with regard to allegations pertaining to irregularities in the financial statements of the company,” Pawan Kumar Bansal, a junior finance minister, told lawmakers in a statement in parliament.
Kingfisher Airlines, the Indian carrier owned by the nation’s largest brewer, declined 3.5 percent to Rs 31.90. The regulator of airports has asked Kingfisher to pay part of its dues for the use of airports by March, the Mint newspaper reported, citing a government official it didn’t name
The author is a Bloomberg News columnist. The opinions expressed are her own
