Indian stocks declined for a second day On Thursday, led by Reliance Industries, after UBS AG cut its rating on the nation’s most valuable company and said any further gains in local equities would be limited.
Reliance slid 1.3 per cent after UBS said oil-refining profit might come under pressure. Tata Steel, the biggest steel maker in the country, sank 6.9 per cent. Stocks retreated even after wholesale prices fell for the first time in three decades, giving the government scope to spend more in the next month’s budget to spur economic growth.
The Bombay Stock Exchange’s Sensex fell 257.31 points, or 1.8 per cent, to 14,265.53, paring gains in this quarter to 47 per cent. The S&P CNX Nifty Index on the National Stock Exchange slid 2.4 per cent to 4,251.40. The BSE 200 Index declined 2.1 per cent to 1,730.44.
“Investors are exiting to book profit from the pre-Budget rally,” said R K Gupta, who manages Rs 650 crore ($135 million) at Taurus Asset Management in New Delhi. “Funds can buy Indian stocks again if the Budget has something attractive.”
Reliance lost 1.3 per cent to Rs 2,025.05. Its stock rating was cut to “sell” from “neutral” at UBS.
“In the short term, given the sharp rally, we expect the market to consolidate,” analysts Suresh A Mahadevan and Navin Gupta wrote in a report On Thursday. UBS is increasing the cash component in its model India portfolio to 5 per cent.
Tata Steel fell 6.9 per cent to Rs 388.3, the lowest since May 28. ACC, the country’s biggest cement maker, plunged 8.8 per cent to Rs 756.35, the most in six months, paring this quarter’s gain to 32 per cent.
State Bank of India, the country’s biggest lender, gained 2.5 per cent to Rs 1,703.30 on speculation the central bank may ease lending rules.
“There is an expectation that the central bank may cut cash reserves for banks, thereby freeing more funds to lend,” said U P Bhat, who helps manage about $1.7 billion at Canara Robeco Asset Management in Mumbai.
Overseas funds sold a net Rs 712 crore of Indian stocks on June 16, according to Sebi.
“Investors will look at the Budget and earnings beginning next month for clearer directions,” said Vaibhav Sanghavi, who manages funds for wealthy individuals as a director of Ambit Capital in Mumbai. “Stocks have moved up sharply and investors are skeptical, so one would expect to see consolidation.”
The following stocks were among the most active in On Thursday’s trading:
Sun TV Network fell 5.3 per cent to Rs 236.3. The rating of Sun TV was lowered at Goldman Sachs Group, which said valuations of local media companies were no longer inexpensive. Sun TV was cut to “neutral” from “buy”.
Kingfisher Airlines fell 3.1 per cent to Rs 52.65. The carrier increased its fuel surcharge on all domestic flights starting yesterday, the company said in an e- mailed statement. The carrier raised the levy by Rs 400, it said. The increase was needed because of higher jet-fuel prices, the airline said.
Spice Communications fell 6.2 per cent to Rs 65.65 after Idea Cellular, the country’s third-biggest mobile operator by market value, said in a statement it would consider merging its operations with the company. Idea fell 3.5 per cent to Rs 78.
