Indian Stocks Track Losses in Asia as Brexit, Fed Concerns Grow

  • ICICI Bank biggest loser on Sensex while Tata Motors slides
  • Foreign investors have been net buyers for 13 consecutive days

Indian stocks capped their steepest three-day drop in six weeks and volatility climbed as growing anxiety over the outcome of the “Brexit” vote sapped demand for riskier assets and investors awaited monthly inflation data.

ICICI Bank Ltd. and State Bank of India, the nation’s top lenders, were among the biggest losers on the S&P BSE Sensex. Tata Motors Ltd., the owner of Jaguar Land Rover, posted the largest drop in a month. Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, retreated the most in two weeks. Tata Steel Ltd. slid for a second day.

The Sensex lost 0.9 percent to 26,396.77 at the close in Mumbai, bringing its three-day decline to 2.3 percent, as the rupee weakened the most in three weeks. The MSCI Asia Pacific Index sank 2 percent as a poll showing a 10 percentage-point lead for Britain to exit the European Union sent jitters through regional markets. The Federal Reserve also meets to decide on policy this week while economists predict data due after market hours on Monday will show India’s consumer-price gains probably accelerated to a four-month high in May.

“This uncertainty in the markets is around the Fed and the Brexit," R. K. Gupta, managing director of Taurus Asset Management Co., which oversees $590 million, said from New Delhi. “The Fed may not raise rates, but the commentary would be keenly looked into. The market was already in an overbought position, a selloff was overdue."

Price Swings

The Sensex’s 10-day historical volatility index, a gauge of price swings, has rebounded from a seven-month low reached last week. The rupee weakened for a third day, retreating 0.6 percent to 67.14 a dollar, according to prices from local banks compiled by Bloomberg. That’s the biggest drop since May 19.

India’s benchmark index completed a weekly decline on Friday, ending two weeks of advances, as investors turned cautious before events including central bank meetings in the U.S. and Japan that could roil markets. The gauge has risen 15 percent from a low reached in February.

The Sensex last week climbed to its highest level since Oct. 28 and its 14-day relative strength index rose to 71, breaching a level some investors see as a signal that further gains may be capped. The gauge had fallen everyday since then.

Economists predict a vote for so-called Brexit will send the pound to the lowest level in more than three decades, while a victory for the ‘Remain’ camp would drive the currency toward the highest this year.

The Fed is seen leaving interest rates unchanged on Wednesday though investors will scrutinize its post-meeting statement for signals on the timing of the next increase in U.S. borrowing costs. Most economists expect the Bank of Japan to expand record monetary stimulus in July rather than on June 16, a Bloomberg survey shows.

Foreign investors bought $32.8 million more Indian shares than they sold on June 10, the smallest inflow in four days, data compiled by Bloomberg show. That’s the 13th straight day of buying, taking net purchases since April 1 to $1.6 billion.

ICICI Bank plunged 3.5 percent, the most since May 2. State Bank of India lost 2 percent, while Axis Bank fell 1.8 percent. Tata Motors tumbled 2.8 percent, the most since May 10. Bharat Heavy Electricals retreated 2.8 percent, extending this year’s loss to 29 percent. Tata Steel declined 3.4 percent.

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