Indian Stocks Drop Most in Two Weeks; Tata Power, HDFC Bank Fall

Indian (SENSEX) stocks declined the most in two weeks amid concern a faster-than-estimated expansion in factory output may reduce the scope for monetary easing.

The S&P BSE Sensex lost 0.6 percent to 19,535.68, according to preliminary closing prices in Mumbai. Volumes were 20 percent below the 30-day average. Tata Power Co. (TPWR), India’s biggest generator outside state control, slid 3 percent after it was downgraded by Credit Suisse Group AG. Lender HDFC Bank Ltd. (HDFCB) retreated 1.9 percent.

Industrial production in January climbed 2.4 percent from a year ago after a revised 0.5 percent drop in December, data from the government showed today. The median of 28 estimates in a Bloomberg survey was for a 1.3 percent gain. Inflation data for February are due on March 14 and the Reserve Bank of India meets for its next policy review on March 19.

“It looks like hopes for a 50-basis point cut next week have been tempered, and at best, we will only have a 25-basis point reduction,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kochi in southern India today. “Some investors would also like to take a hard look at the inflation number before buying.”

The Reserve Bank of India meets for its next policy review on March 19. The authority cut its benchmark rate by 25 basis points to 7.75 percent on Jan. 29, the first reduction in nine months. That’s still the highest among major Asian nations.

Tata Power slid 3.1 percent to 98 rupees. HDFC Bank lost 1.9 percent to 643 rupees.

Foreigners bought a net $251 million worth of local shares on March 8, taking their net investment in Indian equities this year to $9 billion, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion worth of shares last year, the most among 10 Asian markets tracked by Bloomberg.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.