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Bloomberg
India stocks fell as investors weighed whether valuations have become too stretched following two straight weeks of gains.
The S&P BSE Sensex declined 1.2% to 33,831.42 as of 1:41 pm in Mumbai, while the NSE Nifty 50 Index slipped by the same magnitude. Both measures have rebounded about 30% from their record slide on March 23.
The price-to-earnings ratio for the Sensex is already back to its long-term average over the past seven years and in the previous two days the index has failed to cross its 100-day moving average, seen as a technical threshold for a bullish streak to continue.
“After a 30% rally I don’t think there is major value left in the market†said A. K. Prabhakar, head of research at IDBI Capital Market Services Ltd. in Mumbai, “The run up in prices has spread to some companies that might not survive the next few years.†Eleven out of 34 Nifty 50 companies that have reported quarterly results so far have beaten or matched analyst estimates. India is easing the nationwide lockdown to stop the spread of coronavirus infections even as cases continue to rise. The yield on the most traded 6.45% 2029 bond dropped by one basis point to 5.97%, while the rupee weakened 0.3% to 75.855 per US dollar.
While all 19 sector sub-indexes compiled by BSE Ltd. dropped, led by a gauge of banks, twenty-four Sensex shares fell while six rose.
Reliance Industries Ltd. contributed the most to the index decline, slipping 1.9%, while Sun Pharmaceutical Industries Ltd. had the biggest slump, falling 3.7%.
IndusInd Bank Ltd. provided the biggest boost to the index and gained the most, rising 5.7%.