- Gauge retreats for second day after climbing to 7-month high
- Foreign investors were net buyers for 11 consecutive days
Indian stocks fell in a volatile trading, tracking declines around the world, as investors turned cautious before key events including the U.S. Federal Reserve meeting.
Tata Motors Ltd., the owner of Jaguar Land Rover, dropped for the first time in seven days. Infosys Ltd., the second-largest software services provider, was the top loser this week on the S&P BSE Sensex. State Bank of India slid for a second day. Tata Steel Ltd. fell the most in about three weeks.
The Sensex lost 0.5 percent to 26,635.75 at the close in Mumbai, its second day of losses. It earlier rose as much as 0.8 percent. The gauge slid 0.8 percent this week, ending two weeks of advances. The retreat comes before key events such as the Fed’s meeting next week, followed by the U.K.’s referendum on EU membership on June 23, which have the potential to roil markets.
“Brexit is weighing down on the markets globally and that’s pretty much weighing on the Indian markets as well,” Nitasha Shankar, vice president for equity research at Yes Securities Ltd. in Mumbai, said in an interview with Bloomberg TV India. “Fortunately, for us on a fundamental side we are placed quite strongly. So, the impact is not as significant. But until such time this event is behind us we will continue to see some kind of pressure on the index.”
The MSCI All-Country World Index headed for its steepest two-day decline since May 4, led by commodity producers and financial companies. The Stoxx Europe 600 Index was down 1.8 percent. The MSCI Asia Pacific Index lost 0.9 percent.
The Sensex rose to a seven-month high on Wednesday after the Reserve Bank of India said this week it remains willing to cut borrowing costs as long as conditions allow, and as the odds of a rate increase by the Fed receded.
The Sensex has risen 16 percent from a low reached in February, putting India on course to become the first among markets valued at more than $1 trillion to crawl back from a bear market this year. Global investors bought more Indian shares than they sold for an 11th straight day, taking net purchases since April 1 to $1.5 billion.
India’s monsoon, which accounts for four-fifths of the country’s rainfall, reached the mainland in southern Kerala state on Wednesday. The government is counting on above-normal precipitation this year to help control food prices, boost farm production and ease a drinking-water shortage caused by back-to-back droughts. Agriculture accounts for roughly 18 percent of India’s gross domestic product.
The monsoon is key to sustaining India’s world-beating economic growth, which accelerated a faster-than-estimated 7.9 percent in the March quarter. The data cemented the nation’s position as a bright spot among emerging markets as China slows while Russia and Brazil see contractions.
Tata Motors declined 2.2 percent. State Bank of India slid 1.9 percent to pare this week’s gain to 4.8 percent. Tata Steel fell 2.2 percent and Coal India Ltd., the world’s biggest miner of the fuel, retreated 2 percent.
Infosys, which has the highest weighting on the Sensex, lost 6.8 percent this week, its worst performance since the five days through Feb. 12. The company’s Chief Operating Officer U.B. Pravin Rao said Wednesday the company expected some “short term, quarterly bumps" in sales growth.