Indian stocks fell for a sixth day, bound for the longest run of losses since March, as the rupee’s plunge spurred concern that capital outflows will accelerate.
Yes Bank Ltd. slumped 10 percent after raising its leading rate, pacing a measure of 12 lenders to its lowest level in 11 months. Oil & Natural Gas Corp., the nation’s largest explorer, headed for a seven-month low on concern a weak currency will boost the subsidy it gives refiners on crude supplies. Utility NTPC Ltd. slid 5.5 percent, the most on the benchmark index.
The Sensex declined 0.8 percent to 19,202.11 at 11:51 a.m. in Mumbai, extending its loss in July to 1 percent, a second monthly decline. The rupee weakened to within 0.1 percent of its record low after the central bank said yesterday steps to tighten cash supply will be unwound as the currency stabilizes. Global funds have pulled $1.05 billion from local shares this month, extending June’s $1.8 billion sell-off, and $2 billion from bonds, data from the regulator show.
“A weak rupee may lead to trading outflows from overseas investors,” Dhananjay Singh, a director with Blooming Capital Management Pvt., said by phone from Mumbai. “The rupee is not going to appreciate easily. We have to live with that.”
Yes Bank sank 18 percent in intraday trading, the most since October 2008, after it raised its base rate by 25 basis points. The stock is the biggest loser on the CNX Bank Index, which is heading for its lowest closing since Sept. 6, 2012.
Oil & Natural Gas retreated 3.6 percent to 270.6 rupees, poised for its lowest close since Jan. 1. Indian Oil Corp., the nation’s largest refiner, lost 1.5 percent to 92.5 rupees, set for the lowest price since March 2009. Hindustan Petroleum Ltd. dropped 0.5 percent to 198.25 rupees, the lowest in 4 1/2 years.
A weak rupee increases oil import costs for state refiners which buy about 80 percent of their requirements from overseas and pay for it in dollars. The refiners sell diesel, kerosene and cooking gas at government fixed prices and higher import costs drives up their revenue losses. Oil producers ONGC and Oil India compensate the refiners for about 40 percent of the losses by selling them crude at a discount.
The Reserve Bank of India cut its economic growth forecast for the year ending March 2014 to 5.5 percent from 5.7 percent and kept the key rate at 7.25 percent. The economy’s resilience to shocks has eroded and the rapid weakening of the rupee has put the country into a vicious spiral, RBI Governor Duvvuri Subbarao said yesterday. The rupee fell 0.9 percent to 61.0400 per dollar at 11:19 a.m. It touched 61.17 earlier, approaching the all-time low of 61.2125 on July 8.
“The market doesn’t believe the RBI is in a position to perform a calibrated” unwinding of liquidity-tightening steps, Tirthankar Patnaik, a strategist with Religare Capital Markets Ltd., said on Bloomberg TV India today. The rupee may trade in the 58 to 62 per dollar band, he said.
The Sensex has lost 1 percent this year and trades at 13.5 times projected 12-month earnings, down from a 17-month peak of 14.2 times on July 23. The MSCI Emerging Markets Index trades at 10 times.