Indian stocks dropped for a second day this week as investors weighed the central bank’s next decision on interest rates after wholesale prices fell more than expected.
Infosys Ltd., Wipro Ltd. and Tata Consultancy Services Ltd., India’s top software exporters, were among the biggest losers on the S&P BSE Sensex amid a second day of gains in the rupee. Vedanta Ltd., the largest copper and aluminum producer, fell for a third day after losses at its parent widened. Tata Motors Ltd., owner of Jaguar Land Rover, and mortgage lender Housing Development Finance Corp. lost at least 0.7 percent.
The Sensex slid 0.2 percent to 27,206.06 at the close in Mumbai, after falling as much as 1.1 percent. The measure has risen or fallen by more than 1 percent in each of the previous four days, lifting the 30-day volatility on the index to the highest level since September 2013. Consumer prices climbed less than forecast in April, data showed on Tuesday, spurring speculation the central bank may lower interest rates for a third time this year.
“Concerns about earnings, pace of economic reforms, the RBI’s rate-cut trajectory and the timing of a rate hike by the Fed are contributing to the jitter,” R.K. Gupta, managing director of Taurus Asset Management Co., which has about $660 million in assets, said in an interview in New Delhi. “The volatility shows the index may be set for further declines.”
The Sensex entered a so-called correction on May 7, with the gauge falling more than 10 percent from its Jan. 29 record, as foreigners remained net sellers of local shares for 11 days through Friday, the longest streak this year, data compiled by Bloomberg show.
While eight of the 14 Sensex firms that have announced results for the March quarter have beaten or matched estimates, profits will drop for a second straight quarter, forecasts compiled by Bloomberg show. Delays in the passage of important economic bills in the upper house of parliament, where Prime Minister Narendra Modi’s Bharatiya Janata Party doesn’t have a majority, also weighed on investor sentiment.
Wholesale prices fell 2.65 percent from a year earlier in April, official data showed. That beat the 2.3 percent decline estimated by 33 economists in a Bloomberg survey.
Infosys and Wipro declined 1.1 percent each, while Tata Consultancy slid 0.6 percent. Vedanta tumbled 1.6 percent, the biggest decliner on the Sensex, after parent Vedanta Resources Plc, a metals and oil producer controlled by billionaire Anil Agarwal, posted a wider annual loss after booking a $4.5 billion impairment.
Tata Motors fell 0.7 percent, while Housing Development Finance lost 0.8 percent. Sun Pharmaceutical Industries Ltd., the biggest drugmaker by market value, retreated 1 percent.
International investors sold a net $16.8 million of Indian stocks on May 13, paring this year’s inflows to $6.4 billion.