Indian Stocks Fall on Monsoon Concern; Jaiprakash Declines
Aug. 7 (Bloomberg) -- Indian stocks fell, with the benchmark index slumping to its first weekly decline in a month, after brokerages raised concern on GDP growth over poor monsoon rainfall and the farm minister said food prices may climb.
Jaiprakash Associates Ltd., India's biggest maker of dams, lost 5.5 percent, while Mahindra & Mahindra Ltd., the largest maker of tractors, fell 5.1 percent. Kotak Securities Ltd. cut the GDP forecast for the year to March to 4.8 percent from 6.5 percent, while Goldman Sachs Group Inc. said "lower rainfall projections will likely lead to negative agricultural growth."
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 353.79, or 2.3 percent, to 15,160.24. The gauge fell 3.3 percent this week, its first five-day drop since the period ending July 12. The S&P CNX Nifty Index on the National Stock Exchange lost 2.3 percent to 4,481.40. The BSE 200 Index decreased 2.3 percent to 1,849.33.
"India's economic growth in the current financial year may slow by up to 50 basis points due to weak monsoon rainfall," said Jyotivardhan Jaipuria, head of research at DSP Merrill Lynch and Co. in Mumbai. Inflation may also rise if the rains fail, he said. Agriculture makes up about 20 percent of the Indian economy, according to IIFL Ltd. in Mumbai.
DSP Merrill Lynch had earlier forecast the economy to expand at 6.3 percent, Jaipuria said.
Jaiprakash sank 5.5 percent to 218.3 rupees, its lowest since July 17. Mahindra slid 5.1 percent to 835.45 rupees, its steepest drop since Feb. 5.
Monsoon Rainfall
Bharti Airtel Ltd., India's biggest mobile-phone service provider, lost 3.9 percent to 383.9 rupees. The company, which is betting on rural subscribers for growth, fell as much as 8 percent during trading. Maruti Suzuki India Ltd., the maker of half the cars sold in India, plunged 5.2 percent to 1,293.4 rupees.
India's economic growth may slow to 4.8 percent in the current financial year, which began April 1, due to "acute rainfall deficiency," Kotak's economist Mridul Saggar said in a report. Kotak expected the economy to expand 6.5 percent with normal monsoon rainfall, the report said.
"We now think that the worse-than-expected monsoon takes away the recent upside to activity due to the continued easing of financial conditions and improving external conditions," said Goldman economist Tushar Poddar.
India's monsoon, the main source of irrigation for the nation's 235 million farmers, was less than average for a second week, threatening harvests of crops such as sugar cane and rice.
Expansion Plans
The country received 23.5 millimeters of rain, 64 percent below the average 65.9 millimeters in the week ended Aug. 5, the India Meteorological Department said on its Web site. Falls were deficient in 27 of 36 weather divisions. The deficit in the June 1 to Aug. 5 period widened to 25 percent from 19 percent a week earlier, the office said.
A normal monsoon is key to Prime Minister Manmohan Singh's efforts to push economic expansion back to a 9 percent pace and cool prices of essential commodities such as sugar and lentils. Dry weather in July last year hurt sugar cane output this year, turning India into a net importer for the first time since 2006.
"Insufficient rain has hurt the cane crop in Uttar Pradesh," Farm Minister Sharad Pawar told parliament today. "We need to keep a close eye on the monsoon situation."
Bajaj Hindusthan Ltd., India's biggest producer of sugar cane by sales, fell 2.3 percent to 180.05 rupees. Shree Renuka Sugars Ltd., the largest sugar refiner, slid 2.2 percent to 174.2 rupees.
The following were among the most active on the exchange:
Bajaj Auto Ltd. (BJAUT IN) sank 6.8 percent to 1,175.8 rupees. India's No. 2 motorcycle maker was cut to "neutral" from "overweight" at JPMorgan Chase & Co., which said the company will need to recoup market share to sustain growth in the medium term.
Bharat Heavy Electricals Ltd. (BHEL IN) fell 4 percent to 2,183.2 rupees. India's biggest power-equipment maker was cut to "neutral" from "outperform" at Macquarie Group Ltd., which cited the stock's valuations.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
Aug. 7 (Bloomberg) -- Indian stocks fell, with the benchmark index slumping to its first weekly decline in a month, after brokerages raised concern on GDP growth over poor monsoon rainfall and the farm minister said food prices may climb.
Jaiprakash Associates Ltd., India's biggest maker of dams, lost 5.5 percent, while Mahindra & Mahindra Ltd., the largest maker of tractors, fell 5.1 percent. Kotak Securities Ltd. cut the GDP forecast for the year to March to 4.8 percent from 6.5 percent, while Goldman Sachs Group Inc. said "lower rainfall projections will likely lead to negative agricultural growth."
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 353.79, or 2.3 percent, to 15,160.24. The gauge fell 3.3 percent this week, its first five-day drop since the period ending July 12. The S&P CNX Nifty Index on the National Stock Exchange lost 2.3 percent to 4,481.40. The BSE 200 Index decreased 2.3 percent to 1,849.33.
"India's economic growth in the current financial year may slow by up to 50 basis points due to weak monsoon rainfall," said Jyotivardhan Jaipuria, head of research at DSP Merrill Lynch and Co. in Mumbai. Inflation may also rise if the rains fail, he said. Agriculture makes up about 20 percent of the Indian economy, according to IIFL Ltd. in Mumbai.
DSP Merrill Lynch had earlier forecast the economy to expand at 6.3 percent, Jaipuria said.
Jaiprakash sank 5.5 percent to 218.3 rupees, its lowest since July 17. Mahindra slid 5.1 percent to 835.45 rupees, its steepest drop since Feb. 5.
Monsoon Rainfall
Bharti Airtel Ltd., India's biggest mobile-phone service provider, lost 3.9 percent to 383.9 rupees. The company, which is betting on rural subscribers for growth, fell as much as 8 percent during trading. Maruti Suzuki India Ltd., the maker of half the cars sold in India, plunged 5.2 percent to 1,293.4 rupees.
India's economic growth may slow to 4.8 percent in the current financial year, which began April 1, due to "acute rainfall deficiency," Kotak's economist Mridul Saggar said in a report. Kotak expected the economy to expand 6.5 percent with normal monsoon rainfall, the report said.
"We now think that the worse-than-expected monsoon takes away the recent upside to activity due to the continued easing of financial conditions and improving external conditions," said Goldman economist Tushar Poddar.
India's monsoon, the main source of irrigation for the nation's 235 million farmers, was less than average for a second week, threatening harvests of crops such as sugar cane and rice.
Expansion Plans
The country received 23.5 millimeters of rain, 64 percent below the average 65.9 millimeters in the week ended Aug. 5, the India Meteorological Department said on its Web site. Falls were deficient in 27 of 36 weather divisions. The deficit in the June 1 to Aug. 5 period widened to 25 percent from 19 percent a week earlier, the office said.
A normal monsoon is key to Prime Minister Manmohan Singh's efforts to push economic expansion back to a 9 percent pace and cool prices of essential commodities such as sugar and lentils. Dry weather in July last year hurt sugar cane output this year, turning India into a net importer for the first time since 2006.
"Insufficient rain has hurt the cane crop in Uttar Pradesh," Farm Minister Sharad Pawar told parliament today. "We need to keep a close eye on the monsoon situation."
Bajaj Hindusthan Ltd., India's biggest producer of sugar cane by sales, fell 2.3 percent to 180.05 rupees. Shree Renuka Sugars Ltd., the largest sugar refiner, slid 2.2 percent to 174.2 rupees.
The following were among the most active on the exchange:
Bajaj Auto Ltd. (BJAUT IN) sank 6.8 percent to 1,175.8 rupees. India's No. 2 motorcycle maker was cut to "neutral" from "overweight" at JPMorgan Chase & Co., which said the company will need to recoup market share to sustain growth in the medium term.
Bharat Heavy Electricals Ltd. (BHEL IN) fell 4 percent to 2,183.2 rupees. India's biggest power-equipment maker was cut to "neutral" from "outperform" at Macquarie Group Ltd., which cited the stock's valuations.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
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