Stocks declined, extending last week's retreat, as a selloff in Asian stocks sapped demand for riskier assets. Bharti Airtel slid for a third day. ICICI Bank, was the top loser on the Sensex. ITC declined to a one-week low. Dr Reddy's and Adani Ports & Special Economic Zone fell more than two per cent each. The Sensex lost 0.7 per cent to 25,436.97 at the close in Mumbai. The gauge has risen 11 per cent from a February low as the risk-on sentiment returned to Asia. Foreigners bought $588 million of local shares last month, adding to March's inflow of $4.1 billion, which was the most in three years.
The yen soared almost five per cent on the final two trading days in April as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a US interest-rate increase in June or July.
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"It's the reversal of the yen-carry trade happening because of what Bank of Japan did," Mehraboon Irani, head of private-client group at Nirmal Bang Securities, said in an interview with Bloomberg TV India. About "75 per cent of the rise which Indian markets saw was due to global factors. If there's a little bit of global uncertainty, there is a distinct possibility we may fall off. However, India remains a buy on dips market."
While a weakening dollar helped boost commodity prices in April by the most since 2010, the global stocks' rebound from a three-year low in February is stumbling as economic data and corporate earnings do little to lift investor sentiment.
US consumer spending rose less than economists forecast in March, data showed Friday, wrapping up the weakest quarter in a year for the biggest part of the nation's economy.
Locally, investors are focused on the ongoing quarterly earnings season to look for signs of economic growth filtering through to company bottom lines. Profits have dropped in four of the past five quarters in the worst run since the global financial crisis. So far in this reporting season, six out of 10 Sensex companies that have reported March-quarter results beat or matched analyst estimates.
Asset quality
Bharti Airtel declined 1.6 per cent to its lowest level since April 22. ITC dropped 1.2 per cent. Dr Reddy's Laboratories tumbled 2.5 per cent, the most since March 29. Adani Ports retreated 2.2 per cent.
ICICI Bank plunged 4.3 per cent, extending last week's six per cent slide. On Friday, the lender said its fourth-quarter profit sank 75 per cent to Rs 700 crore ($105 million) as it set aside Rs 3,600 crore as buffer for possible defaults.
Religare Capital Mkts reiterated its sell recommendations on the stock and said it it could fall as much as 20 per cent as the asset quality disclosures "do not materially ease concerns," analyst Parag Jariwala and Vikesh Mehta wrote in a note Monday.
Foreign investors bought $36 million of local stocks on April 28, taking this year's inflows to $1.8 billion. The Sensex has retreated 2.6 per cent this year and trades at 15.6 times 12-month projected earnings versus 11.7 for the MSCI Emerging Markets Index.
