Indian Stocks Swing Between Gains, Losses Before RBI Meeting

Indian (SENSEX) stocks swung between gains and losses following the benchmark index’s surge to a three-year high yesterday, and before the central bank meets to review monetary policy.

Sun Pharmaceutical Industries Ltd. (SUNP), India’s top drugmaker by market value, advanced to a seven-week high. State Bank of India, the nation’s biggest lender, climbed for the third day. Sesa Goa Ltd., an iron-ore miner, dropped 1.6 percent.

The S&P BSE Sensex fell 0.2 percent to 20,606.7 at 9:43 a.m. in Mumbai, after changing direction at least three times. The gauge rallied 3.4 percent yesterday to its highest level since Nov. 10, 2010, after the U.S. Federal Reserve maintained stimulus. Thirty-day volatility on the index climbed to the highest level in four years yesterday.

Reserve Bank of India Governor Raghuram Rajan may hold the benchmark repurchase rate at 7.25 percent in his first meeting in charge of the central bank, according to all 36 economists in a Bloomberg survey. Wholesale-price index rose 6.1 percent in August, the most in six months, according to the latest government data. The RBI predicts inflation will be around 5.5 percent in the fiscal year through March 2014.

Given the inflation “it looks very difficult for an RBI governor to be dovish and ease any of the interest rates,” Sandeep Singal, co-head of institutional equities at Emkay Global Financial Services Ltd., said in an interview to Bloomberg TV India today. “We expect a status quo.”

Rajan inherited an economy that expanded 4.4 percent last quarter from a year earlier, the weakest pace since 2009, and a weak currency. The RBI under former governor Duvvuri Subbarao introduced a series of tightening measures, including raising two interest rates, to shore up the rupee, which slumped to an all-time low on Aug. 28.

Overseas investors bought a net $83.2 million of domestic shares on Sept. 18, data from the regulator show. That took this year’s net inflow to $12.6 billion, the second-highest among 10 Asian markets tracked by Bloomberg. They pulled $3.7 billion from local shares in the three months ended August as capital fled emerging markets amid concerns the Fed would pare stimulus.

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

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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