Indian Stocks Fall Most in 3 Weeks Before Inflation, Output Data

Indian stocks retreated, with the benchmark index dropping the most in three weeks, before the government releases data on retail inflation and factory output.

Tata Motors Ltd. (TTMT), owner of Jaguar Land Rover, slumped the most in 10 months. Cellular-phone operator Bharti Airtel Ltd. (BHARTI) declined to a two-week low. Engineering company Larsen & Toubro Ltd. (LT) had its steepest three-day slide in four months. The rupee weakened the most in a month.

The S&P BSE Sensex lost 1.2 percent to 20,925.61 at the close. Consumer-price inflation probably rose 10 percent in November from a year earlier, after climbing 10.09 percent in October, according to a Bloomberg survey before data due later today. A separate survey showed factory output may shrink 1.2 percent in October. Reserve Bank Governor Raghuram Rajan has raised the benchmark interest rate by 50 basis points to 7.75 percent since taking charge at the central bank in September.

“Inflation and factory production data are awaited because they have a bearing on the Reserve Bank of India’s policy,” K.K. Mital, head of portfolio management services at Globe Capital Market Ltd., said by phone from New Delhi. He expects the RBI to hold interest rates at its policy next week.

Tata Motors tumbled 4.6 percent, the most since Feb. 1. Maruti Suzuki India Ltd. (MSIL), the biggest carmaker, dropped 2.2 percent, the most since Sept. 23. Bharti Airtel decreased 1.4 percent to 323.60 rupees. Larsen extended its three-day fall to 7.1 percent, the most since Aug. 20.

While much of India’s inflation is concentrated in food, it’s also evident in non-food manufacturing and services, Rajan said at a conference in Kolkata yesterday. The RBI seeks to balance the need to stem price gains while also supporting a “relatively weak” economy, he said.

Rate Outlook

Indian (SENSEX) economic growth quickened last quarter from a four-year low on higher factory output, a revival threatened by looming interest-rate increases to fight rising prices. Six of eight economists in a Bloomberg News survey expect the central bank to leave the repurchase rate unchanged on Dec. 18, while two expect a 25-basis point increase.

The Sensex climbed to a record Dec. 9 after the Bharatiya Janata Party won the state elections, giving it momentum to end the ruling Congress party’s decade-long rule in polls due by May and install Narendra Modi as prime minister.

The gauge has climbed 7.7 percent this year, the best performer among the four largest emerging markets, and trades at 13.6 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.4 times.

Overseas investors bought a net $160.2 million of Indian equities on Dec. 11, extending this year’s inflows to $18.7 billion, the most in Asia after Japan, data from the market regulator show.

The CNX Nifty Index decreased 1.1 percent to 6,237.05. The India VIX rose 1.1 percent.

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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