India stocks drop most in four months as oil jump dents optimism

Bloomberg

India’s benchmark stock index posted its biggest drop in four months on concern that the spike in the price of oil, the nation’s biggest import, may dampen the outlook for Asia’s third-biggest economy. The rupee and sovereign bonds also weakened.
The S&P BSE Sensex declined 1.3 percent to 38,645.18 at the close in Mumbai, while the NSE Nifty 50 Index slipped 1.4 percent. The price of Brent crude jumped to the highest level in almost six months as the US government was said to be planning to eliminate sanction waivers that allowed buyers to import Iranian crude.
Foreigners have pumped more than $7.5 billion into Indian equities this year on expectations that interest rate cuts and the prospective re-election of PM Narendra Modi’s government will support earnings growth. Votes in the general election that started on April 11 will be counted on May 23. India’s earnings season is underway with five of the 49 Nifty companies that have reported earnings so far either beating or matching estimates, according to data compiled by Bloomberg.
The spike in the prices of crude oil may weigh on markets at higher levels, said Sameer Kalra, president at Mumbai-based advisory Target Investing.
On the other hand, a better-than expected earnings season so far will help stocks “to hold on to the valuations and keep the flow momentum.”
“At this juncture, one needs to be extremely stock specific by following a proper exit strategy,” Sameet Chavan, a technical analyst at Angel Broking Ltd, wrote in a note.
Seventeen of the 19 sector indexes compiled by BSE Ltd declined, led by a gauge of oil and gas stocks. Yes Bank Ltd fell the most on the benchmark gauge while software exporters such as Tata Consultancy Services rose, tracking weakness in the local currency. Jet Airways India Ltd slumped for a second day after the carrier suspended all its flights.