Mumbai: India's benchmark stock index fell from a 30-month high amid concern valuations have exceeded the outlook for earnings growth.
ITC Ltd, the nation's biggest cigarette company, declined 1.1 per cent. Overseas investment in Indian equities has climbed 54 per cent this year, driving the Bombay Stock Exchange's Sensitive Index to the most expensive benchmark in Asia and the BRIC markets, which include China, Brazil and Russia.
Tata Motors Ltd, the owner of Jaguar Land Rover, jumped to a record after returning to profit in the first quarter.
"Valuations are definitely not cheap," said Ajay Argal, who helps manage about $13.5 billion in assets at Birla Sun Life Asset Management Co in Mumbai.
"We believe it will be a stock-specific market."
The Sensex lost 67.51, or 0.4 per cent, to 18,219.99. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.5 per cent to 5,460.70. The BSE 200 Index declined 0.4 per cent to 2,322.03.
ITC fell 1.1 per cent to Rs157.25. The stock has climbed 25 per cent this year and is the best performer on the 30-member Sensex. It trades at 26 times estimated earnings.
Housing Development Finance Corp, the biggest mortgage lender, dropped 1.4 per cent to Rs3,073.2, paring its advance this year to 15 per cent. The shares trade at 27 times estimated earnings.
Tata Motors soared 5.9 per cent to Rs957.3. It reported net income of Rs19.9 billion in the three months ended June, compared with a loss of Rs3.3 billion a year earlier.
