Mumbai: Indian stocks dropped for the first time in three days, paring a weekly advance, amid a political impasse over the government's move to allow foreign companies to open supermarkets. The BSE India Sensitive Index, or Sensex, fell 0.1 per cent to 18,506.57 at the close. The gauge increased 1.1 per cent this week, ending two weeks of losses. ITC, Asia's second- largest tobacco maker, was the biggest drag on the Sensex. NTPC, the largest power producer, dropped to the lowest price in about four months.
The lower house of parliament was adjourned yesterday amid uproar over the government's move to allow foreign retailers to set up in India. The government has called for an all-party meeting on November 26 to solicit support for the plan, the Press Trust of India reported on Thursday. Prime Minister Manmohan Singh averted a no-confidence vote.
"Political uncertainty remains a cause of concern," said Nirakar Pradhan, chief investment officer at Future Generali India Life Insurance in Mumbai. "The clearance of many important bills listed for consideration in Parliament will be positive. That would signal the government can walk the talk."
Manmohan is reaching out to political parties to win backing to push through reforms in the winter parliamentary session that began on Thursday, including proposals to increase overseas investment in the insurance and pension industries. He failed to break a logjam yesterday at a dinner hosted for leaders of the biggest opposition Bharatiya Janata Party, the Press Trust said, citing people it didn't identify.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. was little changed at 5,626.60 as three stocks fell for every two that rose on the 50-stock gauge. India VIX, which measures the cost of protection against losses in the Nifty, slid for a fourth day, falling 1.5 per cent to 14.68. Trading volumes of Nifty shares were 22 per cent lower than the 30-day average, data shows.
"Trading volumes are shrinking and soon we will get into the December zone when we will see even lesser participation by investors," said Vaibhav Sanghvi, director at Ambit Investment Advisors in Mumbai. ITC declined 0.8 per cent to Rs286.6, paring a weekly advance to 4.4 per cent. NPTC lost 2.8 per cent to Rs159.4. Drugmaker Cipla decreased 1.4 per cent to Rs381.7.
Jet Airways (India), the world's second best- performing airline stock this year, jumped 16 per cent to Rs505.6, the biggest advance since September 2009, on speculation a foreign carrier may buy a stake in the company. The shares have almost tripled this year.
"There is speculation that Jet will sell a 24 per cent stake," said Kishor Ostwal, managing director at CNI Research Ltd. in Mumbai. "That's why the shares are surging." The airline has 'no plan at all' for a stake sale, said spokeswoman Ragini Chopra.
The Sensex has increased 20 per cent this year, driven by foreign fund flows and government
measures to open up Asia's third-largest economy. The gauge is the second-best performer this year among global benchmark measures with at least $1 trillion in market value, data shows.