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economics

India Stocks Sink to One-Month Low as Rupee Weakens Amid Selloff

Updated on
  • Tata Motors, Lupin tumble after profits missed estimates
  • RBI said to step in to support currency after recent losses

India’s benchmark equity index sank to a one-month low, erasing most of the year’s gains that drove it to multiple records, amid a global equity rout sparked by concern that inflation will force interest rates higher.

The S&P BSE Sensex dropped for a sixth day, falling 1.6 percent to close at 34,195.94 in Mumbai for its longest run of losses since September. The Nifty 50 Index also lost 1.6 percent. Tata Motors Ltd., owner of Jaguar & Land Rover, fell the most on Sensex, sinking 5.1 percent after its quarterly profit missed analyst estimates. Lupin Ltd. erased 5.7 percent of its value after third-quarter profit missed estimates.

“It’s always better to be on the sidelines when there’s a global selloff,” Ashish Chaturmohta, head of technical and derivatives strategy at Sanctum Wealth Management, said by phone. “We have been maintaining prudence and have hedged equities fully and have no exposure to derivatives currently.”

Read: India Budget Puts Central Bank in Bind as Market Eyes Rate Hike

A measure of industrials and consumer durables led declines in all 19 sectoral sub-indexes compiled by BSE Ltd. as anxiety built up before the Reserve Bank of India’s policy review on Wednesday. A weak rupee also dampened sentiment.

The currency weakened 0.2 percent to 64.19 per dollar as of 3:45 p.m. in Mumbai after touching 64.4350 intraday, the lowest level since Dec. 18. Traders said the RBI intervened
to sell dollars to stem the decline.

RBI Governor Urjit Patel needs to keep interest rates low to ensure Prime Minister Narendra Modi can bridge a widening fiscal deficit. He also needs to bring down an inflation rate that breached the 4 percent midpoint of a target band late last year, and which is expected to climb as the government increases spending before a general election next year.

All economists in a Bloomberg survey predict that RBI will hold the benchmark repurchase rate unchanged at 6 percent Wednesday.

— With assistance by Kartik Goyal

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