India Rupee Declines on Concern Slowdown Will Damp Stock Inflows

India’s rupee declined on concern corporate earnings will fall as global economic growth slows, damping demand for the nation’s stocks.

The BSE India Sensitive Index of shares dropped before Tata Consultancy Services Ltd. and Infosys Ltd., the country’s two biggest software exporters, release quarterly results tomorrow. Infosys’s dollar revenues may decline from the previous quarter, according to a JPMorgan Chase & Co. note dated yesterday. Dollar inflows by foreigners who bought Indian debt-purchase permits at an auction on July 4 will limit the rupee’s losses, according to state-run Andhra Bank. The rupee has weakened more than 7.5 percent in the past three months.

“The broad concerns about the global slowdown are intact,” said Vikas Babu, a Mumbai-based foreign-exchange trader at the lender. “We are seeing some foreign inflows as the rupee is relatively cheap and this is probably a bargain opportunity.”

The rupee declined 0.4 percent to 55.6350 per dollar in Mumbai, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 12.25 percent.

Data due tomorrow will show India’s industrial production rose 1.8 percent in May from a 0.1 percent gain the previous month, according to the median of 33 estimates in a Bloomberg News survey. Wholesale prices rose 7.62 percent last month, according to another Bloomberg News survey, compared with 7.55 percent in May. The government is scheduled to release the data on July 16.

Three-month onshore rupee forwards traded at 56.37 per dollar, compared with 56.41 yesterday, and offshore non-deliverable contracts were at 56.33 from 56.31. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

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