Thursday, January 31, 2008

India's Sensex Falls in January, Has Worst Start in 28 Years

By Shailendra Bhatnagar

Jan. 31 (Bloomberg) -- India's Sensitive Index fell in January, its worst start in at least 28 years, on concerns of a possible recession in the U.S. and as investors sold shares on the last day of the settlement of derivatives contracts. ICICI Bank Ltd. led declines.

The Sensex dropped 13 percent this month, it's biggest monthly drop since May 2006, on concern a recession in the world's biggest economy will slow growth in Asia. Exacerbating the sell-off was the flight of foreign capital, with almost $3.3 billion of Indian equities sold in January, the most in a month since at least 1997, according to data compiled by Bloomberg.

``The fall is more related to the expiry of monthly derivatives contracts because the rollovers have been weak,'' said Jayesh Shroff, who helps manage $7.6 billion of assets at SBI Funds Management in Mumbai. ``I don't think sales by foreign investors are India-specific only. It is a global phenomena and it will play itself out in the market.''

The monthly contracts for Indian derivatives expire on the last Thursday of every month. The rollover of a long position indicates that buyers expect a stock price to rise, while the rollover of a short position indicates to investors that prices may fall. A decrease in rollovers may signify that investors expect more volatility.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 109.93, or 0.6 percent to 17,648.71 after rising as much as 1.4 percent. The gauge fell 15.5 percent from its record close of 20,873.33 on Jan. 8. The S&P/CNX Nifty Index on the National Stock Exchange declined 30.15, or 0.6 percent, to 5,137.45.

Banks, DLF

ICICI Bank Ltd., the country's most valuable bank, declined 39.20, or 3.3 percent, to 1,145.65 rupees. State Bank of India, the nation's largest bank by assets, fell 58.40 rupees, or 2.6 percent, to 2,162.25. DLF Ltd., the nation's largest real estate developer, shed 49.65 rupees, or 5.8 percent, to 812.55.

Bharti Airtel Ltd., India's top wireless services provider, rose for the second day after it said earnings growth would be ``sustainable'' as it adds users in the country's rural areas.

``We believe our growth momentum is picking up well, especially in the rural areas,'' Chief Executive Officer Manoj Kohli said in a Bloomberg Television interview from New Delhi today.

Bharti yesterday reported profit jumped 42 percent to 17.2 billion rupees ($436 million) in the three months ended Dec. 31, after winning clients at a quicker pace than rivals in the world's fastest-growing wireless market. Bharti gained 12.15 rupees, or 1.4 percent, to 864.45.

Second-ranked Reliance Communications Ltd. fell 10.4 rupees, or 1.7 percent, to 601.95. Reliance Communications, based in Mumbai, reported profit growth slowed as handsets offered for as little as $20 failed to help it win as many customers as its larger rival.

Net income increased to 13.7 billion rupees in the three months ended Dec. 31 from 9.24 billion rupees a year earlier, Reliance said in a statement to the National Stock Exchange today. Sales rose 27 percent to 47.8 billion rupees.

The following stocks rose or fell. Stock symbols are in parentheses after company names:

Asian Paints Ltd. (APNT IN) rose 73.3 rupees, or 6.3 percent, to 1,245.7, its highest in at least 17 years, after third-quarter profit rose to 1.08 billion rupees from 653.1 million a year earlier. The stock had posted a similar rise yesterday.

Balrampur Chini Mills Ltd. (BRCM IN) fell 3.35 rupees, or 4.2 percent, to 76.25 after India's second-biggest sugar maker reported a loss of 600,000 rupees in the three months ended December compared with a profit of 191.8 million rupees in the year-earlier quarter.

Container Corp. of India (CCRI IN) rose 221.05 rupees, or 14.3 percent, to 1,771.25, its largest gain in more than 3 1/2 years after the nation's biggest transporter of goods by rail containers said it will give one free share for each held.

To contact the reporter on this story: Shailendra Bhatnagar in New Delhi at Sbhatnagar3@bloomberg.net .

Source : bloomberg.com

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