India’s benchmark stock index capped its second week of declines amid losses in Asian equities before key US jobs data that may indicate whether the world’s biggest economy can withstand higher borrowing costs.
Dr Reddy’s Laboratories was the worst performer in the S&P BSE Sensex, while Wipro, a software exporter, retreated to a two-month low. Adani Ports and Special Economic Zone Ltd slid to about a three-month low. GAIL India rallied to a 10-month high after CNBC-TV18 reported the largest natural-gas supplier plans to sell its stake in a city-gas distributor. Tata Motors, owner of Jaguar Land Rover, climbed for a second day.
The Sensex lost 0.13%, or 33.71 points, to 25,228.50 at close in Mumbai, paring losses of as much as 0.8%. Asian stocks had their steepest weekly drop since the middle of February after comments from Federal Reserve officials that a June rate hike is possible fueled concerns about capital outflows from developing nations. Overseas funds have sold $114mn of Indian shares this month after investing $585mn in April and $4.1bn in March, which was the biggest inflow in three years.
“Markets remain a tricky place to invest as western central bankers have realized that monetary easing isn’t working anymore,” Saurabh Mukherjea, chief executive officer of institutional equities at Ambit Capital in Mumbai, said in an interview with Bloomberg TV India. “Caution and risk aversion are my watch words as the outlook is tough. Sensex at 22,000 is still in play,” he said, reiterating a forecast made in August last year.
Adani Ports tumbled 1.7%, taking the week’s decline to 18%, the biggest loss since October 2008.
ITC lost 2.2% this week. The company closed the plants starting 4 May, when the Supreme Court ordered transferring to the Karnataka High Court of all petitions challenging the health-warning rules on packs of tobacco products, according to an exchange filing. The factories are shut until the company is in a position to comply with the interim requirements pending hearing in the state court, according to the statement.
Foreign investors sold $4.6mn of local stocks on 4 May, trimming this year’s inflows to $1.7bn. The Sensex has retreated 3.4% this year and trades at 15.5 times 12-month projected earnings versus 11.3 for the MSCI Emerging Markets Index.
Meanwhile the rupee yesterday closed unchanged against the US dollar, ahead of key US job data.
The home currency closed at 66.56, unchanged from its previous close of 66.56. The rupee opened at 66.56 a dollar and touched a high and a low of 66.54 and 66.62, respectively.
Data on Thursday showed the number of Americans filing for unemployment benefits rose more than expected last week, posting the biggest jump in more than a year.
India’s 10-year bond yield closed at 7.433%, as compared with its Thursday’s close of 7.435%.
So far this year, the rupee has weakened 0.62%, while foreign institutional investors have bought $1.68 billion from the local equity market and sold $151.1 million in debt markets.
Asian currencies closed higher. Philippines peso was up 0.44%, Japanese yen 0.28%, China renminbi 0.17%, China offshore spot 0.09%, Malaysian ringgit 0.09%, and Thai baht 0.06%. However, South Korean won was down 0.46%, Indonesian rupiah 0.05%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.638, down 0.18% from its previous close of 93.780.
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