Markets drop from two-month high on Bharti, HDFC earnings

Indian stocks dropped from a two-month high after quarterly earnings of Bharti Airtel Ltd and Housing Development Finance Corp disappointed investors.

Bharti Airtel, the nation's biggest cell-phone company, tumbled to a one-week low as its second-quarter profit that beat estimates included a one-time gain. HDFC, the largest mortgage lender, declined the most in a month after its net income missed estimates. Asian Paints Ltd was the worst performer on the CNX Nifty Index after its sales and profit trailed forecasts. The S&P BSE Sensex slid 0.4 per cent to 27,362 at the close in Mumbai, after rising as much as 0.5 per cent in early trade in response to China's cut in interest rates. The index capped a fourth weekly advance on Friday as the European Central Bank signalled it may boost stimulus. So far, seven of the 10 Sensex companies that have reported September-quarter results have matched or beaten estimates. "While the earnings season hasn't been bad, some big names disappointed on Monday, causing the market to fluctuate, despite a global rally," D K Aggarwal, chairman of SMC Investments in New Delhi, said.

"Investors will take cues from the remainder of the reporting season and the results of the Bihar state election."

Reforms momentum

The ongoing elections in Bihar are important for Prime Minister Narendra Modi's efforts to control the upper house of parliament, where opposition lawmakers have blocked major economic proposals including a nationwide sales tax. A win would give him momentum in about a dozen more state elections through 2017 that will determine control of the body. Poll results are due on November 8.

Investors bought a net $41.5 million of Indian stocks on Oct. 23, taking this year's inflows to $4.5 billion. The Sensex has dropped 0.5 percent this year, compared with a 9 percent decline in the MSCI Emerging Markets Index. The Indian measure is valued at 15.8 times projected 12-month earnings, compared with a multiple of 11.5 for the developing nations index, data compiled by Bloomberg show.

Bharti declined 1.8 percent, paring this month's advance to 4.4 percent. Net income increased 10.1 percent to 15.2 billion rupees ($234 million) in the three months ended September from a year earlier, compared with analysts'estimates for 11.9 billion rupees. The earnings included a 6.6-billion-rupee exceptional gain from the disposal of the towers and a net tax benefit.

Missing Estimates

Second-quarter net income at HDFC rose 18 percent to 16.1 billion rupees from 13.6 billion rupees a year earlier. That fell short of the 16.4 billion rupees estimated by analysts. The shares tumbled 1.9 percent, paring this year's gain to 16 percent.

Asian Paints plunged 4.8 percent, the most since Aug. 24. The company's group profit of 3.99 billion rupees missed the 4.4-billion rupees estimated by analysts. It reported sales of 37.3 billion rupees, less than the estimated 39.2 billion rupees.

Coal India Ltd., the world's biggest producer of the fuel, was the worst performer on the Sensex. Reliance Industries Ltd., owner of the world's largest refining complex, slid 1.3 percent after rising 4.8 percent last week.