Indian stocks and the rupee fell
the most in five weeks after monthly data showed factory output weakened and after the speculation the U.S. Federal Reserve will signal a move
toward interest-rate increases at a meeting this week.
The S&P BSE Sensex lost 0.8 percent to 26,844.64 in Mumbai, while the rupee dipped 0.6 percent to 61.0125 per
dollar, the weakest since Aug. 13.
Aluminum maker Hindalco Industries Ltd. dropped 3 percent, sending a gauge of 10 metal producers to its fourth day of losses.
Industrial-production expansion was cooled, slowing to 0.5 percent in
July, from 3.4 percent a month earlier, a report showed after
markets hours on Sept. 12. Economists surveyed by Bloomberg had
forecast 1.8 percent growth.
The Fed, which meets this week (Sept. 16-17), is considering the timing of borrowing-cost increases and whether to revise its public guidance on the path of rates.
“There is a growing hawkish expectation from the Fed and that is causing a lot of nervousness,” Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services Ltd. in Mumbai, said by phone today. “Weaker industrial production also doesn’t support an improving outlook for the economy.”
The Sensex has increased 27 percent this year, the best performer among the world’s 10 biggest markets, as foreigners bought $14.1 billion of shares, the most among the eight Asian markets. Prime Minister Narendra Modi’s administration has prioritized curbing food costs, part of a sweeping agenda that also strives to revive economic growth from near a decade low.
Consumer prices grew 7.8 % from a year earlier in
August, against 7.96 % in July, a separate report showed.
While gains have cooled from as much as 11.16 percent last November, the Reserve Bank of India aims to limit the pace of retail inflation to 8 percent or less by January 2015.
Today the government releases wholesale inflation data for August. The central bank has signaled it could ease monetary policy if inflation slows faster than anticipated. It left the key interest rate unchanged at 8 percent on Aug. 5 and meets for its next policy review on Sept. 30.
Prices grew 4.33 percent from a year earlier, compared with 5.19 percent in July, according to the median estimate of 32 analysts and economists surveyed by Bloomberg.
