Sensex Halts Seven-Month Rally as RBI Holds India Interest Rates

India’s benchmark stock index ended a seven-month rally as the central bank kept interest rates unchanged to curb price pressures.

Bharat Heavy Electricals Ltd., the biggest power-equipment maker, fell to a four-month low. Axis Bank Ltd. declined for a second day. Hindalco Industries Ltd., India’s second-largest aluminum producer, ended a two-day advance. The rupee completed its worst quarterly retreat in a year.

The S&P BSE Sensex added 0.1 percent to 26,630.51 today, after swinging between a gain of 1 percent and a loss of 0.4 percent. The gauge fell 1.7 percent last week, the biggest weekly drop in more than a month, amid concern the U.S. Federal Reserve may begin paring its record stimulus sooner than has been expected. Indian markets will be closed for holidays from Oct. 2 through Oct. 6.

“After a steep correction for the better part of last few days, the market experienced a severe bout of volatility as participants were nervous ahead of a string of holidays,” Devang Mehta, head of equity advisory at Anand Rathi Financial Services Ltd., wrote in an e-mail today.

The Reserve Bank of India kept its repurchase rate at 8 percent today, joining counterparts from Russia and Brazil in holding borrowing costs this month as it seeks to cool price pressures. Standard & Poor’s said it expects Prime Minister Narendra Modi to carry out growth-enhancing policies in raising India’s outlook last week, and that better deficit or inflation metrics might trigger a rating boost.

Bharat Heavy, HDFC

Bharat Heavy tumbled 3.5 percent, the worst performer on the Sensex today. Axis Bank retreated 2.2 percent to its lowest level since Aug. 13. Hindalco decreased 1.9 percent.

Housing Development Finance Corp., the nation’s largest mortgage lender, climbed the most in two weeks. The stock has rallied 33 percent this year. Ceat Ltd. surged to a record, leading tire makers higher as declining rubber prices improved the outlook for earnings.

The Sensex lost less than 0.1 percent this month, ending the longest run of monthly gains since January 2007. The gauge has risen 26 percent this year as overseas funds bought $13.8 billion of local shares, the most among eight Asian markets tracked by Bloomberg. The gauge is the top performer among the world’s 10 biggest markets in 2014.

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