Indian Stocks Completes Weekly Drop Amid U.S. Fed Rate Concern

  • Prospects of June rate hike spark concern of outflows from EMs
  • Global investors buy $271 million of local shares this month

Indian stocks declined, with the benchmark gauge capping its third weekly loss in four, as investors weighed the prospects for a U.S. interest-rate increase next month.

Lupin Ltd. plunged the most since 2008 after the drugmaker reduced its revenue forecast. ICICI Bank Ltd., the nation’s biggest private lender, fell the most in two weeks. Reliance Industries Ltd., owner of the world’s largest refining complex, slid to a three-month low. ITC Ltd. climbed after its revenue beat estimates and the cigarette maker said it would issue free shares.

The S&P BSE Sensex dropped 0.4 percent at the close in Mumbai. The gauge retreated 0.7 percent this week amid concern higher borrowing costs in the U.S. would temper flows to emerging markets. Foreigners have bought $271 million of local shares this month, compared with $585 million in April and $4.1 billion in March, which was the biggest inflow in three years, data compiled by Bloomberg show.

“The probability that the Fed will hike in June is very high," Michael Preiss, executive director for client investments at Taurus Wealth Advisors Pte., a wealth management firm in Singapore, said in an interview to Bloomberg TV India. “The market is now trying to adjust to the new reality that rates could go two times in the near future."

Some $900 billion was wiped of the value of global equities over the last three days as prospects for a Fed rate increase in June, spurred by comments from Fed officials and minutes of the last policy meeting. Fed Funds futures put the odds of a move next month at 28 percent, up from 4 percent a week ago.

Lupin plunged 9.1 percent, the most since November 2008. The company told analysts in a conference call after market hours on Thursday that it expects revenue of $3.5 billion in the year ending March 2018, less than the $5 billion estimated previously. The drugmaker is “unlikely to achieve even the reduced revenue target of $3.5 billion,” Fathima Khan, an analyst with Khambatta Securities Ltd., said in an interview.

ICICI Bank lost 2.4 percent, extending this year’s loss to 16 percent. Reliance Industries slid 1.8 percent to its lowest level since Feb. 18.

ITC rose 1.7 percent, extending the weekly gain to 3.4 percent. The company announced it will give a free share for every two held. It reported fourth quarter net income of 25 billion rupees, matching the analysts estimate 25.2 billion rupees. It reported sales 100.6 billion rupees, beating the estimate 97.9 billion rupees.

So far, nine out of 17 Sensex companies that have posted March quarter results have so far beaten or matched estimates.

Foreign investors bought $51 million of local stocks on May 19, taking this year’s inflows to $2.2 billion.

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