STOCK MARKET WATCH, Friday, December 16, 2011

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76. India Profit Forecasts Cut Deepest Since ’09 as Sensex Sinks Most in World

http://www.bloomberg.com/news/2011-12-15/india-profit-forecasts-cut-most-since-09-as-sensex-sinking-most-in-world.html

Indian stocks are ending 2011 with the biggest decline among the world’s largest equity markets, and analysts say the worst is yet to come.

Earnings forecasts (SENSEX) for BSE India Sensitive Index companies for the year ending in March 2012 have fallen 7.9 percent to 1,160 rupees per share, the biggest drop since the 12 months ended March 2009, according to about 1,500 estimates compiled by Bloomberg. Analysts cut outlooks for Maruti Suzuki India Ltd. (MSIL), the country’s biggest carmaker, and Tata Steel Ltd. (TATA), the largest producer of the alloy, by at least 29 percent, the data show.

While Prime Minister Manmohan Singh said in a Dec. 14 interview with Bloomberg News that he expects economic growth in India to accelerate to an annual pace of 9 percent, analysts are slashing their forecasts for companies as seven interest-rate increases this year drive up financing costs and a 15 percent plunge in the rupee boosts import prices. Bank of America Corp., CLSA Asia-Pacific Markets and UTI Asset Management Co. say the downgrades will extend into the 2013 fiscal year and deepen declines in the Sensex, which has plunged 24 percent this year, the most among benchmark measures in the 10 largest markets.

“Till now, the concern was that inflation and interest rates are going to hurt earnings growth,” said Swati Kulkarni, who helps oversee $12 billion at Mumbai-based UTI Asset, India’s fifth-largest money-management company. “Now the rupee is causing the biggest damage to earnings. We may see more earnings downgrades in the next two to three months.” Kulkarni’s UTI MNC (UTIUGSC) fund has beaten 97 percent of its peers this year, data compiled by Bloomberg show.