- Sensex swings before slump in metalmakers drags it lower
- Reserve Bank keeps interest rates unchanged before budget
Indian stocks tumbled the most in two weeks in late trade as investor attention turned to declines in global equities after the nation’s central bank Governor Raghuram Rajan left borrowing costs unchanged.
Tata Steel Ltd.and Steel Authority of India Ltd., the largest producers, slumped the most in five months, while Vedanta Ltd., a copper producer, paced losses among metalmakers. Oil & Natural Gas Corp. fell the most in four weeks. ICICI Bank Ltd. capped its biggest four-day slide in more than four years and State Bank of India slid to a two-year low.
The S&P BSE Sensex tumbled 1.2 percent at the close in Mumbai, with bulk of the losses coming after European equities began trading at about 1:30 p.m. local time. The Stoxx Europe 600 Index retreated 1.6 percent after materials and energy companies led Asia’s benchmark equity index lower and U.S. oil dropped as much as 3.9 percent. Reserve Bank of India Governor Raghuram Rajan kept the main rate at 6.75 percent, a decision forecast by 42 of 44 economists in a Bloomberg survey.
“There were no expectations on the rate cut by the RBI but what is happening on the global front is hurting our markets," Nitasha Shankar, vice president for equity research at Yes Securities Ltd. in Mumbai, said in an interview with Bloomberg TV India on Monday. “Most of the global markets have been trading on a very weak note, particularly with issues relating to China’s growth."
Oil prices have erased last week’s rally on speculation U.S. stockpiles are continuing to expand amid a global glut. Developing-nation stocks are retreating from the biggest four-day gain since October as optimism that global central banks from Japan to Europe are ready to do what’s needed to spur growth faded.
The Reserve Bank “continues to be accommodative,” Rajan said Tuesday, while awaiting details of the government’s budget on Feb. 29. While falling oil prices give him space to join Indonesia and Japan in easing further, adding to the five reductions made in 2015 may jeopardize his inflation target if the government reneges on its pledge to narrow the budget deficit.
Tata Steel tumbled 7.2 percent, the most since Aug. 24. Steel Authority lost 7.9 percent to its lowest level since August 2013. Vedanta plunged 7.8 percent, taking its decline in the past 12 months to 67 percent. The S&P BSE India Metal Index retreated 4.3 percent, the most among the 13 sector indexes compiled by the BSE Ltd.
Oil & Natural Gas fell 3.8 percent, while Reliance Industries Ltd., owner of the world’s largest refining complex, decreased the most since Jan. 20.
ICICI Bank retreated 3.1 percent. The stock has slumped 11 percent in the past four sessions, the steepest loss since the period ended Oct. 5, 2011. State Bank of India dropped for a third day to the lowest price since March 2014.
Overseas funds bought a net $60 million of Indian stocks on Feb. 1, paring this year’s outflow to $1.7 billion. They purchased $3.3 billion of shares last year, the smallest in four years.
The Sensex has plunged 6 percent this year and trades at 15 times its projected 12-month earnings, compared with a multiple of 10.8 for the MSCI Emerging Markets Index.