Mumbai: India's benchmark stock index held around the year's lowest level before the federal budget later this week. Software exporters advanced as Reliance Industries and ONGC declined.
The 30-stock S&P BSE Sensex index increased less than 0.1 per cent to 19,331.69 at the close in Mumbai. The measure last week closed at its lowest since December 24, capping four straight weeks of losses. Tata Consultancy Services and Infosys, the biggest software makers, added more than 1 per cent. Reliance Industries, owner of the world's largest refining complex, lost 1 per cent. ONGC tumbled 1.9 per cent.
Foreigners have bought a net $8.2 billion of local shares since January 1, adding to last year's purchases of $24.5 billion, even as the statistics office on February 7 said economic expansion this year will be the weakest in a decade and data on February 12 showed factory output fell for a second month in December. The Sensex has lost 0.5 per cent this year, the worst-performing benchmark gauge in Asia after Malaysia.
"The market looks a bit tired at the moment, perhaps it is waiting for the budget," Tarun Kataria, chief executive at Religare Capital Markets, said on Bloomberg TV India yesterday. "The trajectory should continue to be higher because there's a lot of money out there." The Sensex may reach 23,000 by the year-end "on inflows, not fundamentals," he said.
Finance minister Palaniappan Chidambaram, due to present the budget on February 28, is under pressure to limit spending and keep his pledge to cut the deficit to 3 per cent of GDP in four years, from a targeted 5.3 per cent for the fiscal year ending March. The economy will grow 5 per cent this year, the least since the 4 per cent gain in the 2002 to 2003 period, according to the statistics office.
Infosys jumped 2.7 per cent to Rs2,917, extending this year's rally to 26 per cent, the most among the 30 Sensex companies. Larger rival Tata Consultancy added 1.3 per cent to Rs1,473, a record. Wipro, the third-biggest, rose 0.7 per cent to Rs419. Reliance Industries lost 1 per cent to Rs854. ONGC tumbled 1.9 per cent to Rs317, paring this year's advance to 19 per cent.
The Sensex has fallen 3.8 per cent from a two-year high reached on January25 as profits from State Bank of India to Tata Motors missed estimates and as local mutual funds saw net outflows for the eighth month in January, data and the industry trade body show. Profits at 43 per cent of the Sensex companies trailed estimates in the three months through Dec. 31, compared to 40 per cent in the previous two quarters, data shows.
"The market has been driven by foreigners and domestic investors have been using the rally to sell, and unless there is something very investor-friendly in the budget we are likely to continue the same way," Sajiv Dhawan, managing director of brokerage JV Capital Services, said.