India’s Sensex Caps Worst Week This Year on RBI’s Rate Outlook

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Indian equities retreated for a fourth day, with the benchmark gauge capping its worst week since December, as lenders and automakers fell in late sell-off.

ICICI Bank Ltd. completed its worst week since the period ended August 2011, and Housing Development Finance Corp., the biggest mortgage lender, slid to a four-week low. Tata Motors Ltd., the owner of Jaguar Land Rover, fell to its lowest price since August and Cipla Ltd., a drugmaker, decreased 1.2 percent.

The S&P BSE Sensex lost 0.2 percent to 26,768.49 at the close after giving up gains of as much as 0.8 percent in the last half-hour of trade. The gauge slid 3.8 percent this week after Reserve Bank of India Governor Raghuram Rajan on Tuesday pared the key rate by 25 basis points and said he will wait to assess the monsoon before easing further. The MSCI Asia Pacific Index fell 0.5 percent on Friday before the monthly U.S. payrolls report and after Greece deferred its debt repayment.

“The concerns are over monsoon rainfall and its impact on inflation and whether the RBI will have room to cut rates further,” R.K. Gupta, New Delhi-based managing director of Taurus Asset Management Co., which has about $650 million in assets, said by phone. The market sold off toward the end as “no one wants to carry their positions into the weekend with a possible Greek default looming,” he said.

Global stocks and bonds declined this week as Greece became the first country since the 1980s to defer a payment to the International Monetary Fund and the European Central Bank indicated it would do nothing to combat higher volatility in markets. U.S. employers likely added more jobs in May, signaling the labor market is improving as the Federal Reserve assesses when to raise interest rates, economists said before a Labor Department report today.

ICICI, Nestle

ICICI Bank lost 2.1 percent to its lowest level since July 15 last year, and HDFC declined 1.2 percent to its lowest level since May 12. Tata Motors tumbled 2 percent to its lowest price since Aug. 11. Cipla dropped to a five-month low.

Nestle India Ltd. plunged 11 percent this week, its worst weekly performance since May 2006. Nestle SA’s crisis in India deepened as the nation’s food regulator said its Maggi noodles were “unsafe and hazardous” and ordered a recall even as Chief Executive Officer Paul Bulcke rushed to quash a public relations nightmare.

Coal India Ltd., the world’s top miner of the fuel, surged to a one-year high after Morgan Stanley raised its price target by 22 percent. Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, rebounded from four days of declines.

Global investors bought a net $94 million of Indian stocks on June 4, taking the year’s inflows to $7 billion.

The Sensex has dropped 2.7 percent this year and trades at 14.8 times estimated 12-month profits, versus the five-year average of 14.4. The MSCI Emerging Markets Index is valued at a multiple of 11.9.

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