Sensex ends two-week advance as ICICI Bank drags lenders lower

Mumbai: India’s benchmark stock index capped its first weekly decline in three weeks as ICICI Bank Ltd reported its biggest drop in quarterly profit in at least 15 years as provisions for bad loans surged.

ICICI Bank and State Bank of India (SBI), the nation’s biggest lenders, were the worst performers on the S&P BSE Sensex this week. Bharti Airtel Ltd, the largest mobile phone operator, fell the most in three weeks. Vedanta Ltd, a producer of aluminium and copper, rose for the first time in three days after its earnings report.

The Sensex closed little changed after swinging between gains and losses at least 20 times. The Sensex closed 0.01%, or 3.52 points, higher at 25,606.62, while the Nifty 50 closed 0.03%, or 2.55 points higher at 7,849.80. The Sensex lost 0.9% this week and Friday’s decline pared the monthly gain to 1%.

Bad-loan concerns resurfaced after ICICI Bank’s results. Eleven banks in India reported losses in the three months ended December amid surging bad loans after the nation’s central bank began an audit, known as the asset-quality review, on 1 October.

“ICICI Bank is a heavyweight and its earnings have spooked the market,” Paras Bothra, a Mumbai-based vice-president of equity research at Ashika Stock Broking Ltd, said by phone. “And the state-owned banks are yet to announce their earnings.”

Earnings reports

ICICI Bank said profit plunged 75% to Rs.700 crore, missing the Rs.3,070 crore average of 25 estimates compiled byBloomberg. The lender set aside Rs.3,600 crore as buffer for possible defaults. The stock slid 1.48%, extending the weekly loss to 6%, the most on the Sensex. SBI lost 1.67%.

So far, five out of nine Sensex companies that have reported March quarter results beat or matched analyst estimates.

The Sensex has risen 12% from a February low as the risk-on sentiment returned to Asia. Foreigners bought $588 million of local shares this month, adding to last month’s inflow of $4.1 billion, which was the most in three years. There’s concern that flows into equities may slow after the Bank of Japan (BoJ) this week held off from adding to its monetary stimulus and the US Federal Reserve kept its benchmark rate unchanged.

“We’re in a consolidation phase after the big rally,” Kaushik Dani, a fund manager with Karvy Stock Broking Ltd in Mumbai, said by phone. “Investors are pausing, digesting the rally and will move depending on how the earnings pan out.”

Vedanta jumped 3.75%, ending a two-day, 6.3% drop. The company reported fourth quarter net income before exceptional charges at Rs.955 crore, beating the Rs.563 billion crore estimated by analysts. It sales in the March quarter was Rs.15,830 crore compared with an estimate of Rs.15,480 crore.

Mahindra and Mahindra Ltd, a tractor maker, slid 1% in a second day of declines. Bharti Airtel Ltd fell 2.4% to pare this month’s gains to 3.7%.

Foreign investors bought $36 million of local stocks on 28 April, taking this year’s inflows to $1.8 billion. The Sensex has retreated 2% this year and trades at 15.7 times 12-month projected earnings versus 11.8 for the MSCI Emerging Markets Index.