Sensex retreats for fifth day in a row before derivatives expire

Indian stocks declined for a fifth day, with the benchmark gauge erasing gains in the last hour of trade, before monthly derivative contracts expired on Thursday.

Tata Motors, the owner of Jaguar Land Rover, fell the most in six weeks. State Bank of India, the nation's biggest lender, paced declines among peers. Bharti Airtel, the nation's largest mobile phone operator by subscribers, climbed for a second day. State-run refiner Bharat Petroleum Corp rallied the most in three weeks after Goldman Sachs Group Inc added the stock to its "conviction buy" list.

The S&P BSE Sensex lost 0.1 per cent to 28,161.72 at the close in Mumbai, after rising as much as 0.9 per cent earlier. The gauge has dropped 4.1 per cent this months' amid concern a rise in US interest rates could lead to outflows from emerging-market assets. Earnings per share for the index's 30 companies decreased in the three months ended December for the first time in six quarters, data compiled by Bloomberg show.

"Markets are trading volatile before the derivatives expiry," Chandan Taparia, a derivatives analyst with Anand Rathi Financial Services, said by phone on Tuesday. "The end of the fiscal year is also putting pressure on stocks and traders are opting to reduce positions."

The CNX Nifty Index retreated 0.1 per cent to 8,542.95. The India VIX index, a measure of protection against stock market swings using options, slid 4.2 per cent to 13.67, its lowest close since December 11. Tata Motors plunged 3.5 per cent. State Bank of India declined 1.5 per cent and ICICI Bank decreased 0.6 per cent, while HDFC Bank fell 0.9 per cent.

Bharti Airtel rose 2.8 per cent, the best performer on the Sensex. Bharat Petroleum rallied 3.6 per cent, the most since March 2, after Goldman Sachs increased its 12-month price target by 37 per cent. Indian Oil Corp, the country's biggest state-run refiner, advanced 1.6 per cent, the most in a week, after Goldman Sachs upgraded the stock to buy from neutral and raised its price target by 24 per cent. Hindustan Petroleum Corp added 1.5 per cent.