Indian equities declined the most in a month even as the benchmark inflation rate slowed to a more than three-year low in January.
The BSE India Sensitive Index, or Sensex, fell 0.7 percent to 19,468.14, according to preliminary closing prices, with volumes 30 percent more than the 30-day average at this time of the day. Maruti Suzuki India Ltd. retreated the most in seven months after exiting the MSCI India Index. State Bank of India Ltd. slid after third-quarter earnings missed estimates. Tata Motors Ltd. dropped ahead of its earnings today.
The wholesale-price index rose 6.62 percent from a year earlier, after climbing 7.18 percent in December, government data showed. The deceleration, if sustained, may increase room for another interest-rate cut as growth falters. Consumer-price inflation was 10.79 percent in January, the second highest in the Group of 20 major nations.
“Inflation, which has moderated due to high base effect, is still sticky,” A.K. Prabhakar, senior vice president for equity research at Anand Rathi Financial Services Ltd., said by phone from Mumbai today. “Stocks seem to have priced in all the positives. We need aggressive policy reforms to move higher from these levels.”
Prime Minister Manmohan Singh initiated policy changes in September to stimulate investment, ending more than a two-year logjam in economic decision-making. The steps included opening retail and aviation to more foreign participation, paring fuel subsidies, easing caps on capital flows and setting up a panel to accelerate infrastructure projects.
Overseas funds bought $300,000 of Indian equities on Feb. 12, extending this year’s purchases to a net $7.6 billion, a record for the period, the data show. They were net buyers of $24.5 billion of stocks last year, the highest among 10 Asian markets tracked by Bloomberg, excluding China.
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