The rupee weakened 0.4% to 65.0550 a dollar yesterday on speculation importers are taking advantage of the currency’s recent strength to step up dollar purchases.

Bloomberg
Mumbai

Indian stocks declined after a three-day rally pushed the benchmark gauge to a two-month high. Metalmakers and energy shares were among the worst performers.
Vedanta, the nation’s largest copper producer, plunged the most in two months as the company refuted a report that Chief Executive Officer Tom Albanese would stand down. Hindalco Industries, an aluminium producer, and Tata Steel tumbled at least 2.7%. Oil & Natural Gas Corp, the biggest explorer, slid to a two-week low, while Coal India, the world’s top producer of the fuel, fell for a third day.
The S&P BSE Sensex slid 0.2% to 27,306.83 at the close, after changing direction at least 10 times.
The Sensex capped a third weekly gain on Friday as global funds returned to emerging markets amid signals the Federal Reserve will delay increasing interest rates until next year. Foreigners were net buyers of domestic shares for a seventh straight day on October 19, the longest stretch of inflows for two months. That pushed up the gauge’s valuation to a two-month high, data compiled by Bloomberg show.
“The market has had a good rally and some breather was expected,” Kaushik Dani, a fund manager at Karvy Stock Broking in Mumbai, said by phone. “The was no major news or earnings to drive prices higher, even though there was buying in the broader market.”
The S&P BSE MidCap index added 0.5%, rising for a fourth day. A gauge of smaller-sized companies advanced for an eighth day, the longest run of gains since April.
Global funds bought a net $164mn of Indian stocks on October 19, taking this year’s inflow to $4.4bn, the highest after Taiwan among eight Asian markets tracked by Bloomberg. They pulled $2.6bn in the three months ended September, the most for any quarter since 2008.
“The big emerging markets selloff is over and outflows are abating,” Vikas Gupta, an executive vice president at Arthveda Fund Management, said by phone. “Foreigners will see India as an exception, although it will take two to three months before inflows start to pick up in a big way.” Gupta said he favours shares of state-run mining companies, software exporters and two-wheeler makers.
Vedanta tumbled 6.4%, the most since August 24 and the worst performance on the Sensex. Albanese will step down as head in March 2016 and will be replaced by former Anglo American CEO Cynthia Carroll, whom the company hired last month as an adviser, Indian television station ET Now reported on its Twitter account. Albanese “will continue to drive the Vedanta business and serve as the group CEO,” the London-traded parent company said in an e-mailed statement following the report.
Hindalco retreated 2.7%, declining for a fourth day. Cipla tumbled 2.2%, the most since September 2. That pared this year’s gain to 7.5%. ONGC fell 1.8%, while Coal India slid 0.8%.
Tata Motors, the owner of Jaguar Land Rover, advanced 1.2%, taking this month’s rally to 28%. Tata Consultancy Services, the largest software services exporter, added 1.5%.
Hero MotoCorp, the largest motorcycle maker, may say its second-quarter profit fell 6.2% to Rs7.16bn from Rs7.63bn a year ago, according to median estimate of 23 analysts in a Bloomberg survey. The shares slid 0.2%.
Three of the four firms that have posted earnings for the September quarter have beaten or matched analyst estimates, data compiled by Bloomberg show.
The Sensex has fallen 0.7% this year and trades at 15.8 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.3.
Meanwhile the rupee fell for the first time in five days on speculation importers are taking advantage of the currency’s recent strength to step up dollar purchases.
The rupee weakened 0.4% to 65.0550 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. That pared its advance this month to 0.8%, following a 1.4% rally in September that made it the best performer among 24 emerging-market exchange rates tracked by Bloomberg.
“Importers are finding these levels attractive to buy dollars,” said Sajal Gupta, head of foreign exchange and rates at Edelweiss Securities in Mumbai. “Expectations of more capital inflows are likely to prevent the rupee from declining sharply.”
Overseas holdings of local-currency bonds have increased Rs148.5bn ($2.3bn) in October to a record as India granted global funds greater access to its debt market, according to data from the National Security Depository.
Foreigners have also bought a net $719.9mn of local shares this month through October 19. The yield on India’s 10-year sovereign bonds rose one basis point to 7.58%, according to prices from the central bank’s trading system.