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Indian stocks fell for a sixth day, the longest stretch of losses in a year, as lenders and carmakers declined amid growing concern the government will fail to meet its fiscal deficit targets.
The BSE India Sensitive Index, or Sensex, retreated 0.9% to 18,309.37, the lowest close since September 13. The S&P CNX Nifty Index on the National Stock Exchange of India lost 1% to 5,574.05. State Bank of India, the nation’s biggest lender, fell 2.1%. Tata Motors, the owner of Jaguar and Land Rover, slid the most in two weeks.
The Sensex erased an advance of 0.5% as European stocks declined and as finance minister Palaniappan Chidambaram told reporters in New Delhi that it was too early to say the deficit goal won’t be reached. The government raised less than 25% of its target on Thursday from selling mobile-phone airwaves, a sale Chidambaram was counting on to help avert a credit-rating downgrade and narrow the budget deficit.
The Sensex dropped 3.1% the past six days, a streak that is the longest since the eight days to November 21. The gauge is valued at 14.9 times estimated profit, more than the MSCI Emerging Markets Index’s multiple of 11.2.
Speculation the central bank will delay interest-cuts also dragged stocks lower yesterday after Reserve Bank of India governor Duvvuri Subbarao said inflation is still at an elevated level. The benchmark inflation gauge had eased to an eight month-low in October.
“At 7.45%, the inflation is quite high as of now,” Subbarao said yesterday in the western Indian city of Pune. “We will look at all data from October policy review to December review before taking any action.” The central bank holds its next policy review on December 18.
The RBI held interest rates for a fourth meeting on October 30, citing price pressures and resisting calls from Chidambaram to reduce borrowing costs. While the monetary authority has signaled it may ease policy in the January-to-March quarter as inflation cools, Chidambaram renewed his call on Thursday for lower rates to boost growth and consumer sentiment.
State Bank lost 2.1% to Rs2,108.45, its lowest level since October 30. ICICI Bank, the country’s second- biggest lender, tumbled 2.6% to Rs1,027.30. Housing Development Finance Corp, the biggest mortgage lender, shed 2.3% to Rs774.85.
Tata Motors, the maker of the world’s cheapest car, the Nano, decreased 2.7% to Rs265, extending the week’s drop to 5.6%. Maruti Suzuki India, the largest carmaker, retreated 1.9% to Rs1,438.10.
Bharti Airtel jumped 3.8% to Rs301.40, extending this week’s rally to 9.3%, the best among the 30 Sensex companies. Infosys added 2.1% to Rs2,343.35. Oil & Natural Gas Corp, the largest state-owned oil explorer, gained 1.7% to Rs257.90.
Meanwhile, the rupee declined 0.8% this week to 55.175 per dollar in Mumbai, according to data compiled by Bloomberg. The currency touched 55.1950 yesterday, the weakest level since September 13, when the government embarked on a slew of policy changes to improve public finances and attract investment. The market was shut on November 13 and November 14 for local holidays.
One-month implied volatility in the rupee, a measure of exchange-rate swings used to price options, fell 10 basis points, or 0.10 percentage point, to 10% this week. The rate was unchanged yesterday.
Three-month onshore rupee forwards were at 56per dollar, compared with 55.66 on Thursday. Offshore non-deliverable contracts were at 56.02 versus 55.67.