India’s Sensex Slumps Most in 21 Months as Rupee Drops to Record

Indian Stocks Drop as Rupee Slumps to Record Low on Fed Outlook
An electronic ticker board is seen outside the Bombay Stock Exchange (BSE) in Mumbai, India. Photographer: Adeel Halim/Bloomberg

Indian stocks had the steepest drop in 21 months as the rupee slid to a record low after the U.S. Federal Reserve Chairman Ben S. Bernanke said bond purchases may be cut.

The S&P BSE Sensex plunged 2.8 percent to 18,706.70, the most since Sept. 22, 2011, according to preliminary closing prices in Mumbai, the lowest level since April 15. Volume on the gauge was 50 percent more than the 30-day average. HDFC Bank Ltd., the country’s second-biggest private lender, paced declines among banks. Jindal Steel & Power Ltd. sank 9.6 percent, the worst performer on the Sensex today.

The rupee slid to a record low after Bernanke said the Fed may taper its $85 billion in monthly bond buying this year and end the program in 2014 should risks to the U.S. economy abate. The Sensex has slid 6.8 percent since Bernanke first signaled on May 22 that policy makers may pare stimulus efforts that has boosted flows to emerging markets. Foreigners have pulled $3.3 billion from rupee debt this month and $324 million from local stocks this month, data from the regulator show.