Sensex Tumbles to Two-Week Low Before Indian Repo Rate Decision

  • Survey shows 37 of 45 economists see 25 bps cut in repo rate
  • Losses deepen as Europe falls amid global growth concerns

Indian equities slid to a two-week low as a decline in European shares renewed global growth concerns before the central bank’s policy review Tuesday.

Tata Motors Ltd., the owner of Jaguar Land Rover, plunged to a two-year low. Vedanta Ltd., the largest copper producer, extended this year’s loss to 58 percent and Tata Steel Ltd. slid to a one-month low. Coal India Ltd., the world’s top miner of the fuel, slumped to its lowest level since May 2014. Infosys Ltd., the second-largest software maker, halted six days of advance.

The S&P BSE Sensex lost 1 percent to 25,616.84, the lowest close since Sept. 11, with bulk of the losses coming in the final hour of trade. The gauge fell 1.4 percent last week, after two weeks of gains, as investors mulled whether the Reserve Bank of India will cut interest rates for a fourth time this year to bolster economic growth.

“I’d expect the governor to hold rates, but he’s under tremendous pressure, going by all the noise around him by industrialists and politicians,” Anil Ahuja, Singapore-based chief executive officer of IPEplus Advisors, said in an interview with Bloomberg TV India. “If I was to look at the pure data, I’d expect him to hold the rate and wait for more information before reducing.”

Rate Decision Tuesday

Thirty seven of 45 economists in a Bloomberg News survey predict a quarter-point cut by the Reserve Bank of India Tuesday, with seven forecasting no change and one anticipating a 50 basis-point reduction.

RBI Governor Raghuram Rajan left the main rate unchanged at 7.25 percent in August after three cuts in 2015 to meet his inflation target of 6 percent by January. While price pressures have eased sharply as oil slumped below $50 a barrel, household expectations of where inflation will be in a year hit more than 10 percent in June from as low as 8.9 percent in December, according to a central bank survey published Aug. 4.

Losses in the Sensex deepened after European equity declined as global growth concerns resurfaced after Chinese industrial companies reported profits fell the most in at least four years. The Stoxx Europe 600 Index fell 1.1 percent at 12:15 p.m. in London.

Tata Motors, Sun Pharma

Tata Motors plunged 6.1 percent to its lowest level since August 2013. Coal India decreased 3 percent, extending this year’s loss to 20 percent. Infosys tumbled 2.8 percent, ending a six-day rally.

Sun Pharmaceutical Industries Ltd., the nation’s largest drugmaker, decreased 3.5 percent, the most since Aug. 24. Group company Sun Pharma Advanced Research said Friday the U.S. FDA had rescinded approval for Elepsia XR over quality concerns at its Halol plant. Sun Pharma Advanced slid 2.9 percent.

Dr Reddy’s Laboratories surged 5.6 percent, the most since September 2009. Lupin Ltd. added 2.1 percent. Hindustan Unilever Ltd. increased 1.2 percent, ending five days of declines.

International investors sold a net $195 million of Indian stocks on Sept. 23, paring this year’s inflows to $3.9 billion. The Sensex has fallen 6.9 percent this year and trades at 14.7 times projected 12-month earnings, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is valued at a multiple of 10.5.

The market was closed on Friday for a public holiday.

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