Indian Stocks Post Second Weekly Decline as Fed Rate Odds Climb

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  • Sensex, Nifty decline as investors await Fed guidance
  • Tata Motors paces gains among automakers; lenders decline

Indian equities declined, led by lenders and software as investors refrained from taking fresh bets before Federal Reserve Chair Janet Yellen’s speech later Friday.

Yes Bank Ltd. fell the most in a month, while State Bank of India and ICICI Bank Ltd. lost about 1 percent each. Wipro Ltd. and HCL Technologies Ltd. declined at least 2.4 percent. Tata Motors Ltd., owner of Jaguar Land Rover, rallied the most in two weeks, and tractor maker Mahindra & Mahindra Ltd. ended a four-day decline.

The S&P BSE Sensex and the NSE Nifty 50 Index slid 0.2 percent at the close after changing direction at least 10 times. The gauges capped their second weekly decline as investors pull back risk before a speech by Yellen that may provide clues on when the U.S., the world’s largest economy, will raise interest rates. Above-average stock valuations also prompting some investors to avoid taking fresh bets, according to Ambit Investment Advisors Pvt.

“Investors are keenly watching out for signals from the Jackson Hole event and are in a wait-and-watch mode,” Vaibhav Sanghavi, managing director at Ambit Investment, said by phone from Mumbai, referring to the location of the annual gathering of central bankers in Wyoming. “We’re are taking some profits off the table as valuations are looking stretched. We expect markets to consolidate.”

Odds that the Fed will boost rates in September have jumped to 32 percent from 18 percent at the end of July, while traders are betting there’s a 57 percent chance of tightening in December. Higher borrowing costs may hamper flows to emerging markets, including India.

Foreign funds have bought a net $5.8 billion of local shares this year, the most in Asia after Taiwan and South Korea, as capital flows to emerging markets accelerated amid a wave of global policy easing. That’s helped the benchmark gauges rebound at least 21 percent from their lows in February, and sent a gauge of small- and-mid cap companies to a record.

The Nifty ended the week at 8,572.55, approaching a key support level of 8,500 from which it has bounced back three times since July 1. The gauge could fall as low as 8,250 if it falls below the 8,500 level, Kush Ghodasara, founder at Luvkush Finserve Ltd., said by phone.

Tata Motors gained 2 percent, paring the weekly loss to 1.2 percent. Land Rover’s slowest growth in deliveries in three quarters dragged down profit at parent Tata Motors. Profit declined to 22.4 billion rupees ($334 million) in the three months ended June from 52.3 billion rupees a year earlier, Tata Motors said in a statement Friday. The stock has rallied 29 percent this year.