Sensex retreats as Infosys tumbles on sales outlook

Indian stocks declined, led by information technology (IT) companies, after the nation's second-biggest software exporter reduced its sales growth forecast.

Infosys dropped the most on the S&P BSE Sensex, pulling down a gauge of IT companies for a fourth time in five days. Sun Pharmaceutical Industries and Lupin, two of the nation's four biggest healthcare companies, fell about 1.5 per cent each. Vedanta was the best performer on an index of metal producers, which climbed for a sixth day, the longest winning streak since May 2014.

The S&P BSE Sensex lost 0.7 per cent to 26,904 at the close. The gauge completed its second weekly gain on Friday, tracking emerging market equities, as investors became increasingly confident that the US central bank will refrain from raising US interest rates until next year. The gains were fuelled by metal producers, energy companies and power utilities as global central banks show no desire to pull back on stimulus anytime soon.
 

"There's some negativity because Infosys cut its forecast," Deven Choksey, managing director at brokerage KR Choksey Shares & Securities, said in a phone interview. "Some investors have started value-picking in metals and commodity stocks, which had gone down a lot."

Infosys' profit in the September quarter increased to Rs 3,400 crore, beating the Rs 3,280 estimate in a Bloomberg survey. Still, the company cut its sales growth forecast for the year ending March to 6.4 per cent to 8.4 per cent in dollar terms from an earlier forecast of 7.2 per cent to 9.2 per cent. The stock tumbled 3.8 per cent, the most since August 24.

Tata Consultancy Services Ltd., the largest software exporter, declined 1.4 percent in a fifth day of declines before its results on Tuesday. Wipro Ltd., the third-biggest, also fell 1.2 percent.

Sun Pharmaceutical, India's most valuable drugmaker, decreased the most since Sept. 28, while Lupin slid 2.2 percent. Cipla Ltd. retreated 1.9 percent.

Metals Rally

Vedanta jumped 7.1 percent, extending last week's 24 percent rally. That pared this year's loss to 48 percent. Hindalco Industries Ltd., the second-biggest aluminum producer, soared 5.6 percent to its highest level since Aug. 18.

"We've been seeing a good rally in metal stocks for the last few days as they were beaten down and the global markets have stabilised," Chokkalingam G., managing director at Equinomics Research Pvt. in Mumbai, said by phone. Chokkalingam is advising investors to buy shares of auto-parts makers and metals-and-mining companies.

Tata Motors Ltd., the owner of Jaguar Land Rover, rose 1.7 percent to its highest since Aug. 11. Bharat Heavy Electricals Ltd., India's biggest power-equipment maker, climbed 1.8 percent. ICICI Bank Ltd., the country's second-biggest lender, increased 0.5 percent.

Global funds sold a net $6.7 million of Indian stocks on Oct. 8, paring this year's inflows to $3.8 billion.

The Sensex has fallen 2.2 percent this year and trades at 15.6 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.4.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net Ravil Shirodkar, Sam Nagarajan