Bloomberg/Mumbai
Indian stocks dropped for a fourth day, with the benchmark index poised for its worst monthly loss since August, as investors awaited decision of the US Federal Reserve on tapering.
Sesa Sterlite retreated to a two-week low, leading metal producers lower. State Bank of India slid 1.5%, sending a gauge of lenders to a three-month low. Maruti Suzuki India Ltd was the biggest gainer on the S&P BSE Sensex after Macquarie Group Ltd raised its recommendation on the stock.
The Sensex declined 0.2% to 20,647.30 at the close, taking this month’s drop to 2.5%. The Fed ends a two-day meeting today with economists projecting a further reduction in monthly bond purchases. The stimulus spurred foreigners to pour $20bn into local shares in 2013, the most in Asia after Japan. Global investors purchased a net $67mn of Indian equities in January, the least in five months, data compiled by Bloomberg show.
“We expect the Fed to continue with a reduction in asset purchases and that has implications on emerging markets,” Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong, said in an interview to Bloomberg TV India today. Sesa tumbled 3.2% to its lowest price since Jan. 14. Tata Steel slid 2.4%. Aluminum maker Hindalco Industries Ltd fell 1.8%. The companies were the three biggest decliners on the Sensex yesterday.
State Bank fell 1.4%, while ICICI Bank Ltd dropped 1.7%. Mahindra & Mahindra, India’s largest maker of sport-utility vehicles and tractors, decreased 1.5% to its lowest level since October 9.
Maruti Suzuki rallied 6.9%, ending a four-day, 13% slide. Macquarie raised its recommendation on the stock to outperform and lifted the price target 15% to 1,800 rupees. The stock’s 8% tumble yesterday was overdone, the brokerage said in a note to investors.
The Sensex declined to a six-week low yesterday while the rupee rebounded from a two-month low after the Reserve Bank of India unexpectedly increased the policy rate by a quarter-point to 8% to curb inflation. The rupee climbed 0.2% yesterday, completing its biggest two-day gain since November.
The Sensex climbed 9% in 2013, the best annual gain among the four largest emerging markets, and trades at 13 times projected 12-month earnings. The MSCI Emerging Markets Index trades at 9.2 times. Global investors sold a net $212.7mn of local shares on Jan 28, data compiled by Bloomberg show.
The CNX Nifty Index fell 0.1% to 6,120.25. The India VIX gained 1.8%.