Benchmark reverses gains on fears of overheating
Investors prefer to wait to buy at lower levels
Mumbai: India's stocks fell as investors speculated Monday's biggest one-day advance in 10 months may have exceeded the outlook for earnings.
Reliance Infrastructure declined 5 per cent after surging 8.8 per cent on Monday. Tata Steel dropped 3.2 per cent. The stock climbed the most in 11 months on Monday after European policy makers announced a loan package to counter the region's debt crisis. Reliance Infrastructure slid to Rs1,011. Tata Steel dropped to Rs582.05.
"Investors want to cool down a bit," said Ashwin Gada, who heads a branch of Networth Stock Broking in Mumbai. "There was a lot of euphoria on the bailout package. They will wait to buy stocks at lower levels."
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 189.02, or 1.1 per cent, to 17,141.53. The gauge advanced 3.4 per cent on Monday, its biggest one-day climb since July 17. The S&P CNX Nifty Index on the National Stock Exchange lost 1.1 per cent to 5,136.15. The BSE 200 Index retreated 1.2 per cent to 2,167.87.
India's Sensex index trades at 16.5 times this year's earnings estimates, higher than the 12.4 multiple of Brazil's Bovespa index and 7.3 times for Russia's Micex index. China's Shanghai Composite Index trades at 15.5 times earnings.
India's rupee fell against the dollar, extending this month's losses, on speculation increased volatility in global stocks will spur investors to favour the perceived safety of the US currency over emerging-market assets.
