Aug. 4 (Bloomberg) -- India's stocks fell on concern this year's monsoon rainfall may be insufficient to sustain farm output, causing reduced spending in rural areas.
Jaiprakash Associates Ltd., the biggest maker of dams, lost 2.4 percent. ITC Ltd., a cigarette maker betting on rural consumers for growth, declined 0.7 percent. India's monsoon, the main source of irrigation for the nation's 235 million farmers, may be on the lower end of a forecast, the weather bureau said yesterday. Agriculture makes up about 20 percent of the Indian economy, according to IIFL Ltd. in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 93.25, or 0.6 percent, to 15,830.98. The measure climbed 8.1 percent last month as the first-quarter results of 23 of the 30 companies on the Sensex beat analysts' estimates.
"Fears of a sub-normal monsoon persist, it may yet be premature to call it a great time in the markets from here on," said Tushar Pradhan, who manages $1.8 billion of funds for Indian customers as chief investment officer at HSBC Asset Management. "First-quarter results for most Indian companies have come as a positive surprise and it has already shown up in the market reaction."
The S&P CNX Nifty Index on the National Stock Exchange lost 0.7 percent to 4,680.50. The BSE 200 Index declined 0.5 percent at 1,931.96.
Jaiprakash retreated 2.4 percent to 244.65 rupees. ITC declined 0.7 percent to 246.5 rupees. ITC, which gets about half its sales from cigarettes, is raising sales from new businesses like shampoo, food, clothing and its agriculture business, which includes commodity trading, to fuel growth. The stock had declined as much as 3.3 percent earlier.
Rains in July, the wettest month in the June-to-September monsoon season, were 98 percent of the long-period mean, more than forecast, Ajit Tyagi, director general at the India Meteorological Department, said in a phone interview yesterday. That wasn't enough to make up the 52 percent shortfall in June, and rice output will decline from a record last year as farmers planted fewer acres, Farm Minister Sharad Pawar said July 31.
Prime Minister Manmohan Singh is relying on an increase in farm output to push economic growth back to a 9 percent pace and to meet a campaign promise of ensuring food security for poor families.
Housing Development Finance Corp., the biggest mortgage lender, retreated 1.2 percent to 2,504.7 rupees.
Stocks also declined after Kotak Securities Ltd. analysts Sanjeev Prasad and Bhavesh Shah said an imminent retreat is likely.
"We see very little value in most large-cap stocks and do not rule out a 15 percent to 20 percent correction in case of weak monsoons and global economic weakness," Prasad, Kotak's head of research in Mumbai and the top-ranked analyst in Asia Money polls the past four years, said in a research note.
Shares in the Sensex trade at an average 18.7 times future earnings, up from their 2009 low of 8.83 times on March 11, according to data compiled by Bloomberg.
The following stocks were among the most active on the exchange:
Hindalco Industries Ltd. (HNDL IN) rose 4.3 percent to 112.9 rupees. Novelis Inc., a unit of India's biggest aluminum producer Hindalco, posted a first-quarter net income of $143 million, according to a company statement. Sales reached $1.96 billion, Novelis said in the PRN newswire release.
Steel Authority of India Ltd. (SAIL IN) declined 2.2 percent to 175.7 rupees. The country's second-largest producer of the metal cut prices for a second month, a company executive said. Prices of so-called long products were lowered by as much as 1,500 rupees a ton, said the executive, who declined to be identified before an official announcement.
Tata Motors Ltd. (TTMT IN) increased 2.8 percent to 443.1 rupees. The No. 1 truckmaker posted its first sales increase in 10 months in July. It sold 48,054 vehicles last month, 18 percent more than the 40,729 units sold a year earlier. The company started delivering the Nano last month. It sold 2,475 of the small cars.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at firstname.lastname@example.org .