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India’s Sensex Drops to 12-Week Low as Metalmakers, Autos Slide

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Feb. 3 (Bloomberg) -- India’s benchmark stock index dropped to a 12-week low, led by metal and automobile producers, amid speculation reduced U.S. Federal Reserve stimulus will spur more capital outflows.

Hindalco Industries Ltd. fell 5.6 percent, sending a gauge of metalmakers to a three-month low. Bajaj Auto Ltd. had its biggest loss in more than five months, pulling the S&P BSE India Auto Index to its lowest level in four months. ICICI Bank Ltd. slid 2.5 percent, driving an industry gauge to a four-month low.

The S&P BSE Sensex decreased 1.5 percent to 20,209.26, the lowest close since Nov. 13. Overseas funds pulled a net $12.8 million from local shares last month, the first monthly outflow since August, as capital exited emerging markets after the Fed said Jan. 29 it will continue to pare monthly bond purchases, data compiled by Bloomberg show. The Sensex declined 3.1 percent in January, the worst start to the year since 2011.

“Overseas investors are selling, taking liquidity out of system,” said R.K. Gupta, managing director of New Delhi-based Taurus Asset Management Co., which manages about $726 million. “The market may remain under pressure due to growth concerns.”

Hindalco slumped to the lowest price in five months and Tata Steel Ltd., the nation’s largest producer, decreased 3.6 percent. The stock sank 16 percent in January amid projections demand for the alloy may grow at the slowest pace since the global recession of 2008-2009. The S&P BSE Metal Index slid 3.1 percent to its lowest level since Oct. 28.

‘Weak’ Growth

Bajaj Auto fell 3.7 percent to the lowest since Aug. 29. The company’s January sales decreased 8.5 percent, according to a filing today. Tata Motors Ltd. slumped 3.8 percent after the owner of Jaguar Land Rover, said Feb. 1 total sales tumbled 34 percent last month. Maruti Suzuki India Ltd. fell 1 percent. Deliveries at the nation’s biggest carmaker declined 10 percent.

“Industrial growth is weak as is reflected by falling automobile sales and poor demand for metals,” Gupta said.

A manufacturing gauge for India compiled by HSBC Holdings Plc and Markit Economics rose to 51.4 in January from 50.7 the previous month, the strongest pace since March 2013. Still, the reading is below the series average of 55.1, according to HSBC. The statistics office Jan. 31 cut the growth rate for the year ended March 2013 to 4.5 percent from an estimate of 5 percent.

ICICI Bank retreated to the lowest price since Oct. 10 and State Bank of India fell to its lowest close since Sept. 3.

Jet Airways (India) Ltd. slid the most since Dec. 13 after United Airlines said it will suspend a marketing agreement with the Indian carrier after U.S. regulators cut the Asian nation’s aviation-safety ranking for the first time.

Tata Chemicals Ltd. increased 0.6 percent, a fourth day of gains, before its results scheduled for today. Fourteen of 18 Sensex members that have announced results for the three months ended Dec. 31 have beaten or matched analyst estimates.

The CNX Nifty Index on the National Stock Exchange of India Ltd. dropped 1.4 percent to 6,001.80.

Global investors sold a net $93.1 million of Indian shares on Jan. 31, data from the regulator show. They invested $20 billion last year, the most in Asia after Japan, according to data compiled by Bloomberg.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net