Indian stocks end two-day advance as Infosys drops

Indian stocks reversed gains, with benchmark gauges falling to two-week lows, as software exporters and industrials retreated amid expiry of monthly derivatives contracts.

Adani Ports & Special Economic Zone tumbled the most in three months. Technology firms Infosys Ltd and Wipro Ltd were among the worst performers on the S&P BSE Sensex. Tata Steel Ltd had the steepest decline in a month. A gauge of medium-sized companies slid for a third time this week.

The Sensex fell 0.8 per cent and the NSE Nifty 50 Index lost 0.7 per cent at the close, ending a two-day advance. The rollover rate in Nifty August futures, which lapsed Thursday, was at 70 per cent at 4:24 pm in Mumbai. That compares with a three-month mean of 71 per cent on expiry day, data compiled by Bloomberg show.

"Traders raised bearish bets going into the new series as the market didn't move up decisively this month," Nilesh Dedhia, director at NTD Trading Ltd, said by phone from Mumbai. "The daily charts are showing a negative divergence, which is a bearish signal."

The Nifty has swung one per cent or more only twice this month as traders look for clues on how aggressive the US Federal Reserve will be in raising interest rates, something Fed Chair Janet Yellen may touch on when she speaks later this week at a gathering of central bankers in Jackson Hole, Wyoming. At least three Fed officials have made hawkish remarks since the start of last week, though US economic data remains mixed.

"The market has been supported by liquidity, which has been boosted by negative yields" in the developed markets, R K Gupta, managing director at Taurus Asset Management Co, said by phone from New Delhi. "The market is due for a decline."

Foreign funds have bought a net $5.8 billion of local shares this year, the most in Asia after Taiwan and South Korea, as capital flows to emerging markets accelerated amid a wave of global policy easing. That's helped the benchmark gauges rebound at least 21 per cent from their lows in February, and sent a gauge of small- and-mid cap companies to a record.
Bloomberg