Stocks retreat as TCS falls before start of earnings season

Larsen & Toubro, the biggest engineering company, lost 1.9%, while Dr Reddy's Laboratories retreated for a third day

Indian stocks slid for a second day, with the benchmark index declining to a one-week low, before the quarterly earnings reporting season begins Thursday. Tata Consultancy Services (TCS), the nation's top software exporter, tumbled the most in three weeks, before its earnings on Thursday. Larsen & Toubro, the biggest engineering company, lost 1.9 per cent, while Dr Reddy's Laboratories retreated for a third day.

The S&P BSE Sensex fell 0.5 per cent to 28,666.04 at the close. The gauge capped a second weekly gain on Friday after the nation's credit rating outlook was upgraded to positive by Moody's Investors Service. Estimates for the financial year to March 2016 profits for Sensex companies have dropped six per cent since the end of December as investors seek more evidence that Prime Minister Narendra Modi's efforts to propel growth will lead to a revival in corporate profitability.

"The sharp upmove in the market has been led by improving macros and liquidity, while the micros are yet to catch up," Mehraboon Irani, head of private-client group at Mumbai-based Nirmal Bang Securities, said in an interview to Bloomberg TV India. "Now that the earnings season has begun, the micros are coming to the fore. There's going to be some profit-booking as corporate numbers may not live up to expectation." Sensex profits in the three months ended December fell for the first time in six quarters.

TCS outlook

Tata Consultancy might report profit for the March quarter climbed 1.6 per cent from a year earlier to Rs 5,388 crore, according to the median estimate of 26 analysts surveyed by Bloomberg. Reliance Industries, owner of the world's largest refining complex, reports on Friday.

Tata Consultancy fell 1.7 per cent, while Infosys lost 0.9 per cent. Wipro, the third-biggest software exporter, fell for a second day, losing 0.8 per cent. Larsen retreated 1.9 per cent, while Dr Reddy's decreased two per cent. Foreign investors bought a net $73.5 million of domestic shares on April 13, taking the year's inflows to $6.35 billion, the most in Asia. They purchased $16 billion of stocks in 2014. The Sensex has gained 4.2 per cent this year and trades at 16 times projected 12-month earnings, compared with the MSCI Emerging Markets Index's multiple of 12.6.