- Bank of Japan hold benchmark rate at negative 0.1 percent
- Global funds have bought $1.7b of local shares this month
Indian stocks declined from a six-week high as drugmakers tumbled amid losses in Asian equities after the Bank of Japan held off from adding to record monetary stimulus.
Lupin Ltd. was the worst performer on the S&P BSE Sensex on report the company’s Goa unit received observations from the U.S. FDA. Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, slid to a one-month low. Tata Motors Ltd. declined for the first time in 10 days.
The Sensex retreated 1 percent at the close in Mumbai, the biggest loss in three weeks. Benchmark gauges in Europe and Asia fell from their highest closes since January, as the BOJ maintained a negative policy rate and kept its target for increasing the monetary base unchanged. The move comes after the European Central Bank announced unprecedented stimulus last week and monetary authorities will remain the focus of investor attention with the Federal Reserve due to conclude a review on Wednesday.
“We’re seeing profit-taking as markets are indecisive ahead of the Fed meeting,” Anita Gandhi, a director at Arihant Capital Markets Ltd., said by telephone from Mumbai. “Activity is subdued despite the positive inflation data.”
Data on Monday showed India’s inflation eased more than estimated in February, boosting speculation that central bank Governor Raghuram Rajan will lower interest rates after the government stuck with a plan to narrow the budget gap. Rajan on Saturday said the central bank was "comforted" by Prime Minister Narendra Modi’s plan to shrink the budget deficit to 3.5 percent of GDP while telling reporters to "wait and see" how that feeds into monetary policy. He’s scheduled to review policy on April 5 as looks to keep CPI within 5 percent by March 2017.
“The RBI may cut by 25 basis points, more out of appreciation that the government has contained the fiscal deficit to 3.5 percent," Hemant Kanawala, head of equities at Kotak Mahindra Old Mutual Life Insurance Ltd., which oversees about $2 billion in assets, said in an interview with Bloomberg TV India. “The monsoon will be a key variable they may want to wait for."
While India is forecast to overtake a slowing China as the world’s fastest-growing big economy, back-to-back years of poor rainfall have eroded incomes of the bulk of the nation’s population even as rising bad loans at lenders have weighed on their profits. The Sensex has declined 6 percent this year.
Lupin plunged 7.8 percent, the most since November 2008. Sun Pharmaceutical lost 2.2 percent. Cipla Ltd. shed 2.3 percent. Dr. Reddy’s Laboratories Ltd. dropped 3.1 percent, the most since Feb. 9.
Housing Development tumbled 4.1 percent to extend this year’s loss to 12 percent. Tata Motors fell 1.7 percent, ending a nine-day, 21 percent rally.
ITC Ltd., India’s biggest cigarette company, declined 2.6 percent, while Hindustan Unilever Ltd. lost 1.9 percent.
Overseas funds bought $188 million of Indian shares on March 14, boosting the month’s inflow to about $1.7 billion. The Sensex has rallied 6.7 percent this month and trades at 15 times 12-month projected earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.4.