MUMBAI (Reuters) - The BSE Sensex ended little changed on Monday as weak results from top listed firm Reliance Industries weakened investor appetite for riskier bets and sparked profit-taking on a near 14 percent rally over the past two weeks.
Energy giant Reliance Industries, which has the most weight in the main index, shed 3.7 percent to 1,938.55 rupees after posting a larger-than-expected 11.5 percent fall in net profit, its third straight quarterly decline.
J.P. Morgan analyst Pradeep Mirchandani cut his price target on the stock to 2,200 rupees from 2,300 rupees, but kept his “overweight” rating on the company as he believes profitability from exploration and production will improve over the coming quarters.
State-run explorer Oil and Natural Gas Corp was also among the major losers in the main index, falling 2.8 percent to 1,094.65 rupees as Reliance’s results soured sentiment in the oil and gas sector.
“Sectors that have more weight in the index such as oil and gas underperformed,” Sandip Sabharwal, head of Portfolio Management Services at Prabhudas Lilladher, said.
“The risk of the market reacting negatively to something it doesn’t like is more than the chance it will react positively to something it likes, as the market is already at elevated levels,” Sabharwal said.
Dealers said several foreign and domestic funds sold automakers’ shares in a bid to take profits from the auto sector’s near 10 percent jump last week.
Three automakers -- top utility-vehicle firm Mahindra & Mahindra, leading carmaker Maruti Suzuki and No. 1 vehicle maker Tata Motors -- are among the top-5 best-performing stocks in the main index this year.
Maruti Suzuki, which jumped 16.3 percent last week and has more than doubled this year, declined 0.6 percent to 1,369.95 rupees, while Mahindra & Mahindra eased 1.8 percent to 816.15 rupees after more than tripling since the start of the year.
Tata Motors, which has more than doubled in value this year, fell as much as 4.5 percent, but erased losses to climb 3.9 percent to a high of 388 rupees in the last few minutes of trade as it reported a 58 percent rise in net profit, defying forecasts for a halving of earnings.
The 30-share BSE index ended marginally down 0.03 percent, or 3.92 points, at 15,375.04, with 16 stocks declining, after falling almost 1 percent and rising 0.5 percent at one stage.
“Excluding Reliance, I think the market is pretty stable. Most of the other companies have posted pretty good results,” S. Ranganathan, head of research at LKP Shares, said.
Of the 16 companies in the 30-share index that have reported results, 13 have beaten analysts estimates, based on Reuters polling.
The BSE index has soared 91 percent from a 2009 low in early March, and is up 59.4 percent this year -- the fourth-best performance among major world benchmarks tracked by Reuters -- after plunging by more than half in 2008.
This has stoked concerns about rich valuations, which could lead to a near-term correction, traders said.
The BSE index trades at 16.4 times one-year forward earnings, higher than benchmarks in other emerging markets such as South Korea, Indonesia, Philippines and Brazil that trade at a multiple of about 13. Russia trades at 7.4 times forward earnings, according to Reuters data.
Still, analysts believe longer-term prospects for the Indian market are intact, as a revival in the domestic economy and corporate results in the coming quarters will justify stock prices.
Governments around the world are trying to spur the beaten-down global economy by pumping trillions of dollars into corporate rescues and stimulus, but a batch of downbeat U.S. company outlooks and a darkening in consumers’ mood cast doubt on Friday over a snappy global second-half recovery.
Defensive stocks such as consumer-goods maker Hindustan Unilever and diversified cigarette maker ITC bucked the weak trend in the market, rising 5.9 percent and 3.1 percent, respectively.
Leading telecoms firm Bharti Airtel, which is in exclusive talks about a possible merger with South Africa’s MTN, climbed 1.9 percent to 423.45 rupees.
In the broader market, gainers led losers almost 2 to 1 on relatively moderate volume of 435.5 million shares.
The 50-share NSE index rose 0.1 percent to 4,572.30.
Asian shares were higher on Monday, with Japan’s Nikkei rising 1.5 percent, while MSCI’s measure of other Asian markets gained 1.7 percent.
At 1041 GMT, the FTSEurofirst 300 index of top European shares was up 0.7 percent.
MAIN TOP 3 BY VOLUME
* Ispat Industries on 19.1 million shares
* Suzlon Energy on 17.8 million shares
* Mahindra Satyam on 17.1 million shares
STOCKS THAT MOVED
* Shree Cement Ltd gained 6.4 percent to 1,539.85 rupees after its June-quarter net profit more than doubled.
* Pipe maker Jindal Saw Ltd rose 5.75 percent to 458.85 rupees after it reported a near doubling in June-quarter net profit.