Indian stocks fell, closing at the lowest in over six months, as slowing economic growth and a cut in the Federal Reserve’s benchmark rates spurred concerns about the rupee potentially depreciating against the dollar.
The S&P BSE Sensex declined 1.3% to 36,093.47 at the 3:30pm close in Mumbai, while the NSE Nifty 50 Index slipped by the same magnitude.
Government and central bank efforts have so far failed to reverse a collapse in consumption and a financial squeeze that have slowed economic growth to the weakest in six years. Comments by central bank governor Shaktikanta Daslater yesterday may provide insights into what next steps monetary policy makers may offer to spur demand.
“The value of the rupee could fall against the dollar as interest rates in the US decline, leading foreign investors to pull funds out and invest in US bonds,” said Deven Choksey, chief executive officer and managing director at Kisan Ratilal Choksey in Mumbai, adding that the decline could continue because foreign investors want to sell more, and “domestic investor’s portfolios are the collateral damage.”
Eighteen of 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of energy companies.
Twenty six out of 31 companies on the Sensex fell; Yes Bank was the worst performer, dropping 15.5%, while Reliance Industries Ltd contributed most to the index decline, falling 2.3%
HDFC Bank provided the biggest boost to the index, gaining 0.6%, while Tata Motors was the best performer, rising 2%.
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