Sensex closes 52.66 points down as banks retreat
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Mumbai: Indian stocks dropped, with the benchmark gauge paring a weekly gain, as some investors sold lenders and energy companies after recent advances.
Reliance Industries Ltd., which has a 7% weighting on the S&P BSE Sensex, was the biggest drag on the gauge. The stock dropped 2.2%, the most in a week. Axis Bank Ltd. was the top loser on the Sensex, while a gauge of lenders capped its best week since July after Essar Group’s $13 billion deal with a group involving Russia’s Rosneft PJSC improved prospects for loan recoveries at local banks.
Reliance, owner of the world’s largest refining complex, was among the top losers on the Sensex on Friday despite reporting second-quarter profit that beat estimates. Investors are concerned the increased spending on the company’s new telecommunications venture will be a drag on cash flows from its main oil-refining and chemicals businesses.
Reliance Jio Infocomm Ltd. spent Rs13,700 crore ($2 billion) to buy airwaves in the latest round of auctions this month to bolster the 4G phone services it started in September. The company added 16 million users in its first month of operations and said on Thursday it may consider extending the free services after December.
“Investors are concerned about the competitive intensity and margin pressure from the telecom business,” said G. Chokkalingam, managing director at Mumbai-based Equinomics Research & Advisory Pvt. “The earnings are good and the refining business is doing fine.”
The Sensex trades at 16.4 times projected 12-month earnings, compared with a five-year average of 14.3 times. The MSCI Emerging Markets Index is valued at a multiple of 12.5.
Foreign investors sold $44 million of local shares on Oct. 19, paring this year’s inflows to $7.4 billion.
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