Sensex caps second weekly retreat before earnings season

Equities capped their biggest weekly decline in two months in a volatile trading session, as global funds pared their holdings of the nation's shares ahead of the start of the quarterly earnings season.

Maruti Suzuki India, the largest carmaker, slid to a six-week low. Hero MotoCorp, a motorcyle maker, and Tata Consultancy Services, the top software exporter, were the worst performers on the S&P BSE Sensex. Lupin and Bharat Heavy Electricals climbed for a fourth day this week. India Cements paced a rally among producers of the building material.

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The Sensex was little changed at the close in Mumbai after changing direction at least 20 times. Global funds sold $157 million of local shares this week after plowing $4.1 billion in March, the biggest inflow in three years, amid concerns about the outlook for company earnings. Net incomes for the 30 Sensex members have declined in four of the last five quarters in the worst run since the financial crisis.

"Investors are staying on the sidelines until the earnings season begins," Kaushik Dani, a fund manager at Karvy Stock Broking in Mumbai, said by phone. "Some exhaustion was bound to happen after the March rally."

Earnings outlook
The Sensex in March capped its best month since January 2012 as a government pledge to further pare the fiscal gap and speculation of an interest-rate reduction spurred capital inflows. Investor attention shifted back to company earnings after the market discounted the central bank's interest-rate cut Tuesday that was widely predicted. Analysts estimate profit growth of 3.3 per cent in the March-quarter season, which begins next week.

Maruti Suzuki fell 1.2 per cent to its lowest level since February 29. Hero MotoCorp tumbled 1.8 per cent, the most since February 29. Tata Consultancy lost 1.6 per cent to its lowest level since March 18.

Bharat Heavy surged three per cent to a two-month high, paring this year's loss to 27 per cent. Lupin gained two per cent, taking this week's advance to 5.1 per cent.

India Cements surged 5.2 per cent to its highest level since February 1. ACC increased 1.7 per cent. Prism Cement rallied 3.9 per cent to a four-month high. Dalmia Bharat jumped 8.3 per cent to a record. Ramco Cements rallied to an all-time high.

The Sensex has fallen 5.5 per cent this year and trades at 15.2 times 12-month projected profits versus 11.6 for the MSCI Emerging Markets Index.