India’s Sensex Falls to Three-Week Low Before RBI Reviews Rates

  • 37 of 45 economists see 25 bps repo-rate cut: Bloomberg survey
  • Asia stocks set for lowest since 2012 as material shares slump

Indian stocks tumbled to a three-week low as the selloff in global equities showed no sign of slowing, and before the country’s central bank meets to review monetary policy.

Vedanta Ltd., the biggest copper producer, extended this year’s decline to 59 percent. Tata Steel Ltd.fell to a two-year low, dragging an index of metal companies to its lowest in six weeks. Bharti Airtel Ltd., the largest mobile-phone operator, decreased to a 17-month low, while ICICI Bank Ltd. and Axis Bank Ltd. retreated at least 3 percent.

The S&P BSE Sensex declined 1.2 percent to 25,340.36 at 10:12 a.m. in Mumbai, headed for the lowest level since Sept. 7. The 30-stock gauge has decreased 8.9 percent this quarter, headed for its biggest slide since the period ended September 2011. The MSCI Asia Pacific Index declined to a three-year low as a selloff in U.S. and European markets spread to Asia amid concerns China’s economy is faltering despite stimulus efforts.

“A 25 basis point rate cut is a given but the markets today are reacting to the global crash,” D.K. Aggarwal, chairman of SMC Investments, said by phone from New Delhi. “We’re keeping our fingers crossed. ”

The Reserve Bank of India is forecast to make its fourth interest-rate cut of the year at a meeting today as inflation slows. Forty-two of 52 economists in a Bloomberg survey are predicting a quarter-point cut. Governor Raghuram Rajan has resisted pressure from the government to ease policy, leaving rates unchanged in August. Separate surveys predict he’ll stay put for the next 12 months as the U.S. will probably raise rates.

While consumer price-gains of 3.66 percent in August again undershot the central bank’s goal of 6 percent by January, Rajan said this month that the pace is closer to 5.5 percent without base effects. That boosts risks to his target of 5 percent by 2017 and 4 percent in 2018. Wholesale prices declined 4.95 percent.

Vedanta plunged 4.4 percent, while Tata Steel lost 2.8 percent. Bharti Airtel declined 2.6 percent in a seventh day of drop. ICICI Bank slid 3.1 percent. Axis Bank retreated 3.2 percent.

Global fund sold a net $13.1 million of Indian equities on Sept. 24, paring this year’s inflow to $3.8 billion, still the most among eight Asian markets tracked by Bloomberg.

The Sensex has retreated 7.9 percent this year and trades at 14.5 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.3.

Before it's here, it's on the Bloomberg Terminal.