Sensex back in red, tumbles 257 points

STOCKS fell for the first time in three days, led by software exporters and consumer goods companies, as some investors deemed the benchmarkgauge’srallytoaseven-month high to be excessive.

Dr Reddy’s Laboratories and Infosys, the second-largest software services provider, were among the biggest losers on the S&P BSE Sensex. Housing Development Finance Corp, the biggest mortgage lender, dropped to a one-week low. ITC and Hindustan Unilever both fell more than 2% each.

The Sensex lost 1% to 26,763.46 at the close in Mumbai. It rose to a seven-month high on Wednesday after the central bank said this week it remains willing to cut borrowing costs as long as conditions allow, and as the odds of a rate increase by the Federal Reserve decreased. That sent the Sensex’s 14-day relative strength index to 71, a level some investors see as a signal that further gains may be capped.

“The rally has been superb, so some cooling off is expected,” said Arun Kejriwal, a director at Kejriwal Research & Investment in Mumbai. “Some investors may be tempted to book some profits. The focus is now on the Fed meeting, Brexit and how the monsoon progresses.”

Monsoon rains

The gover nment is counting on above-normal precipitation rainfall this year to help control food prices, boost farm production and ease a drinking water shortage caused by back-toback droughts.

Dr Reddy’s retreated 2.1%, the most since May 6. India’s second-largest drugmaker said a US consumer safety watchdog has asked the country’s department of justice to take action for the company’s alleged failure to comply with packaging and reporting rules. Dr. Reddy’s has complied with all legal requirements and will defend itself against the allegations, according to an e-mailed statement from the Hyderabadbased company. Bloomberg

Mumbai, June 9: Infosys, Asia’s second-largest exporter of software services by market value, plunged the most in nine months after chief operating officer UB Pravin Rao said spending by clients remains volatile and may hit profit margin in the short term.

The Bengaluru-based company’s shares fell 4.3% to `1,185.50 in Mumbai on Thursday, the biggest drop since August 24. The company expects “shortterm, or quarterly bumps,” Rao said at a conference organised by Citigroup. “But for the year we remain confident.”

Global spending on information technology has stalled, with Gartner Inc. in April cutting its forecast for this year to $3.49 trillion, which is 0.5% below 2015. Infosys in April estimated sales to expand between 11.8% to 13.8% in dollar terms for the year ending March 31, beating analyst estimates. While announcing its earnings, the company touted several major contract wins in the quarter, including a deal with food packaging company ConAgra Foods. “Infosys warning signals a weak margin outlook,” Sanjiv Bhasin, executive vicepresident at India Infoline, said by phone. “Any negative news flow will hurt the stock as it is over-owned by foreigners and is richly valued. Bloomberg