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Sensex Tumbles Most in Five Months as India’s Tata Motors Slumps

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Jan. 27 (Bloomberg) -- India’s benchmark stock index had its biggest decline in almost five months as global equities dropped and investors awaited tomorrow’s interest-rate decision by the nation’s central bank.

Tata Motors Ltd., the nation’s top automaker by revenue, plunged the most in a year after Managing Director Karl Slym died in Bangkok. ICICI Bank Ltd. fell the most in four months. Ranbaxy Laboratories Ltd. slumped to its lowest level since August. The rupee weakened to a two-month low.

The S&P BSE Sensex lost 2 percent, the most since Sept. 3, to 20,707.45 at the close. Emerging-market stocks fell to the lowest level in more than four months and currencies weakened on concern that slower Chinese growth and reduced U.S. Federal Reserve stimulus will spark more capital outflows. The MSCI Asia Pacific Index headed for the lowest close since Sept. 3, while the Stoxx Europe 600 Index slid 0.7 percent.

“The market reacted to the global selloff,” Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services Ltd., said on Bloomberg TV India today. “We expect a status quo from the RBI tomorrow.”

Forty two of the 45 economists polled by Bloomberg News predict Reserve Bank of India Raghuram Rajan will hold interest rates. He has raised borrowing costs twice since September to cool inflation. Still, a panel set up by the central bank to strengthen the monetary policy framework last week recommended setting a retail inflation target of 4 percent, raising concern the RBI will need to raise rates.

Tata Motors’ Death

Tata Motors, owner of Jaguar Land Rover, fell 6 percent, the most since January 2013, and the worst performance on the Sensex today. Slym, 51, died yesterday in a fall from the Shangri-La hotel in Bangkok. He was in Bangkok to attend a board meeting of Tata Motors’s Thai unit, the company said yesterday, though it didn’t provide details.

Thai police said early finding indicate Slym committed suicide, according to Police Lieutenant Somyot Boonnakaew, who is leading the team probing the case. A letter was found in his room, though authorities haven’t determined who wrote it or whether it’s a suicide note, according to the police.

ICICI Bank tumbled 4.6 percent to its lowest level since Oct. 18 and HDFC Bank Ltd., the biggest lender by value, lost 3.6 percent. The S&P BSE Bankex had the sharpest fall in four months. Tata Steel Ltd. plunged 6 percent, the most in seven months, and aluminum maker Hindalco Industries Ltd. slid 2.5 percent. Tata Power Co., the nation’s biggest non-state-owned generator, lost 4.2 percent, the biggest loss in six months.

RBI Decision

“Steel, power and other interest-rate sensitives will go down further as there is no chance of a cut in interest rates in the RBI policy tomorrow,” R.K. Gupta, the New Delhi-based managing director of Taurus Asset Management Co., which manages about $726 million, said by phone.

Jaiprakash Associates Ltd., a builder of dams and roads, slumped 14 percent, the most in five years. Property developer DLF Ltd. tumbled 8.8 percent, the most in five months. The S&P BSE Realty Index lost 6.8 percent, the most since January 2010.

The rupee weakened 0.7 percent to 63.10 per dollar at the close. It touched 63.3050 earlier, the weakest since Nov. 14. The currency dropped 1.8 percent last week, the most since the five days ended Aug. 30 when it plunged to a record 68.845.

“We see further downside in the rupee in line with other emerging market currencies,” Tirthankar Patnaik, strategist at Religare Capital Mkts Ltd., said in an interview. “China’s economic data and the pace of U.S. tapering is a concern.”

Earnings Scorecard

Ranbaxy declined to its lowest level since Aug. 7 after it was cut to reduce from neutral at Nomura Holdings Inc. The stock extended Jan. 24’s 19 percent plunge after regulators banned it from producing or selling drug ingredients for the U.S. market from a fourth plant in India.

Hindustan Unilever Ltd., the nation’s largest consumer goods company, was the best performer on the Sensex after its third-quarter profit rose 22 percent to 10.6 billion rupees ($168 million). That beat the 9.4 billion rupees estimated by 32 analysts in a Bloomberg survey. All 10 companies on the Sensex that announced earnings so far for the December quarter have beaten or matched analyst forecasts.

The Sensex has declined 2.2 percent this year. It climbed 9 percent in 2013, the best annual gain among the four-largest emerging markets, and trades at 12.9 times projected 12-month earnings. The MSCI Emerging Markets Index trades at 9 times.

Overseas investors sold a net $31.5 million of domestic shares on Jan. 23, the first outflow in 12 days, according to data compiled by Bloomberg. They invested $20 billion in the country last year, the most in Asia after Japan. Net purchases in 2012 were $24.6 billion.

The CNX Nifty Index dropped 2.1 percent to 6,135.85. The India VIX jumped 18 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