Indian stocks declined, with the benchmark index completing its biggest weekly loss in four months, as the weakening rupee spurred concern that capital outflows may accelerate.
Jindal Steel & Power Ltd. plunged 7.6 percent, leading a gauge of 10 metal companies to its lowest close in more than four years. ICICI Bank Ltd. fell to an 11-month low, pacing losses among its peers. The rupee slid 1.1 percent, capping its biggest weekly drop in almost two years.
The S&P BSE Sensex declined 0.8 percent to 19,164.02 at the close in Mumbai, extending this week’s fall to 3 percent, the most since five days ended March 24. A gauge of 233 mid-cap companies slid to a 17-month low. The Reserve Bank of India on July 30 cut its growth forecast for the year to March to 5.5 percent from 5.7 percent, prompting Goldman Sachs Group Inc. to trim its rating on Indian equities to underweight the next day.
“Outflows are likely to continue despite the government’s efforts to boost investments as the rupee remains a concern,” Rajendra Wadher, director with PRB Securities Ltd. in Mumbai, said in a phone interview. “We expect economic growth to drop below 5 percent this year.”
Foreigners pulled $3 billion from stocks and bonds last month, leaving the rupee vulnerable to a current-account gap that widened to a record 4.8 percent of gross domestic product in the year ended March 31. The currency tumbled 3.4 percent this week to 61.0950 per dollar, the biggest decline since the five days through September 2011.
Jindal Steel plunged to 187 rupees, the lowest close since March 2009. Sterlite Industries India Ltd. slumped 3.9 percent to 72.2 rupees. The S&P BSE Metal Index tumbled 3.7 percent to its lowest level since April 2009.
ICICI Bank tumbled 3 percent to 887.10 rupees, the lowest level since September 2012. Mortgage lender Housing Development Finance Corp. fell 1.1 percent to 808.35 rupees. The S&P BSE Bankex lost 4.7 percent this week, extending July’s 14 percent sell-off. The central bank left its benchmark rate unchanged this week and said increases in other borrowing costs in the past two weeks will be withdrawn only after the rupee stabilizes.
“Banks are falling on concerns their cost of funds will continue to rise as RBI may not be able to lower rates,” Deven Choksey, managing director at K.R. Choksey Shares & Securities, said by telephone from Mumbai.
Cigarette maker ITC Ltd. dropped 1.9 percent to 332.95 rupees, the lowest level since July 3. Hindustan Unilever Ltd. lost 3 percent to 615.95 rupees. The stocks have 15 percent weighting on the Sensex.
Financial Technologies (India) Ltd. sank 23 percent after a 65 percent drop yesterday. Its unit National Spot Exchange Ltd. on July 31 suspended some contracts after the government asked the exchange not to start new obligations until further notice. Multi Commodity Exchange of India Ltd., 26 percent owned by Financial Technologies, sank by the 20 percent limit for a second day to 408.45 rupees.
“Investors are nervous as the stability of the financial markets is being questioned,” Choksey said.
Power Grid Corp. of India plummeted 11.2 percent to 91.35 rupees, the lowest close since March 2009, after the state-run company said it will sell 694 million shares to fund investments. The stock was the worst performer today in the MSCI Emerging Market Index.
Ten of the 15 Sensex members that have posted earnings so far for the June quarter beat analyst estimates. About 27 percent of companies in the measure missed forecasts for the three months ended March, and 43 percent in the quarter through December, data compiled by Bloomberg show.
The Sensex has lost 1.4 percent this year and trades at 13.5 times projected 12-month earnings, down from a 17-month peak of 14.3 times on July 23. The MSCI Emerging Markets Index trades at 10 times.