The rupee slipped 0.4% to 66.4775 a dollar in Mumbai yesterday.
Most Indian stocks dropped, with declines in metal producers countering advances in automakers and energy companies.
Vedanta and Hindalco Industries, the largest copper and aluminum makers, were the worst performers on the S&P BSE Sensex after the BSE said that the stocks would be removed from the benchmark from December 21.
Hero MotoCorp and Bajaj Auto, the largest motorcycle makers, were among the biggest gainers on the index. GAIL India, a state supplier of natural gas, extended last week’s 24% rally on report Qatar has agreed to change its LNG-pricing formula to reflect the slump in global energy costs.
Three stocks slid for every two that climbed on the Sensex, which decreased 0.2% at the close after changing directions at least 12 times.
The index has fallen 3.1% in November, its worst month since August, after foreigners pulled $657mn from local equities and the ruling Bharatiya Janata Party’s loss in a state election raised concern about its ability to push reforms. The winter session of parliament begins Thursday.
“The parliament session has been discounted; it would be surprising if any business gets done at all,” Vikas Gupta, an executive vice president at Arthveda Fund Management , said by phone from Mumbai. “We see the index trading in the range for next three to four weeks unless clarity emerges on the Fed liftoff. There are no domestic triggers to propel the market higher.” Gupta favors software exporters, state-owned mining companies and two-wheeler makers. The probability that the Fed will raise the benchmark rate at its December meeting rose to 70% yesterday, according to futures data compiled by Bloomberg. That’s up from 50% at the start of this month.
Vedanta tumbled 2.9%, taking this year’s loss to 58%. Hindalco plunged 3.8%, extending this year’s slump to 53%.
Adani Ports & Special Economic Zone climbed 2.5% and Asian Paints rallied to its highest level since October 23 on the announcement that the companies would be added to the Sensex.
Hero MotoCorp jumped 2.9%, reducing this year’s declines to 15%. Bajaj Auto increased to its highest price this month.
GAIL India advanced 3.5% and Petronet LNG rallied to a record. Qatar’s RasGas has agreed to waive $1bn in penalty that Petronet, India’s biggest buyer of the fuel, has to pay for buying only 68% of the contracted 7.5mn tons this year, the Press Trust of India reported, without citing anyone.
Petronet bought less than it agreed to in 25-year contracts with RasGas after a slump in global energy prices led to the fuel being available in spot market at roughly half that rate, the report said. GAIL, Indian Oil Corp and Bharat Petroleum Corp, the state-owned refiners, had agreed to buy all of the 7.5mn tons a year of LNG from Petronet.
Foreigners sold a net $14.5mn of local shares on Nov. 20, an eighth straight day of outflows. The withdrawals pared this year’s inflows to $3.7bn. The Sensex trades at 15.3 times its projected 12-month profits, versus the 11.3 times for the MSCI Emerging Markets Index.
Meanwhile the rupee fell to the lowest in more than two months on speculation demand for local assets is weakening as the Federal Reserve moves closer to raising US interest rates.
Foreign holdings of rupee-denominated debt dropped by Rs34bn ($512mn) last week, the most since May, data compiled by Bloomberg show.
A gauge of the dollar’s strength rose for a second day after San Francisco Fed President John Williams said Saturday there’s a strong case for a December rate rise assuming economic data continue to be encouraging. Futures contracts show a 70% chance of a December increase.
“Investors are nervous given the renewed talk of US tightening this year,” said Ankur Jhaveri, co-head of currencies and rates at Edelweiss Financial Services in Mumbai. Month- end demand for dollars from importers could also be weighing on the rupee, he said.
The rupee slipped 0.4% to 66.4775 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. That’s the lowest closing level since September 11.
The currency has declined 1.8% this month. Overseas investors sold a net $358.4mn of Indian shares last week through November 19.
The yield on the sovereign notes due May 2025 rose two basis points to 7.72%, according to prices from the Reserve Bank of India’s trading system.
The yield climbed five basis points last week, including three basis points on Friday, as a proposed wage increase for federal employees raised concern the government may miss its fiscal-deficit target.
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