Oct. 3 (Bloomberg) -- Indian stocks fell, extending their biggest quarterly loss in three years, on concern a weakening local currency may make imports of oil and other commodities more expensive, boosting raw-material costs for companies.
ICICI Bank Ltd., the nation’s largest private lender, led its peers lower on concern further increases in borrowing costs will hurt credit growth. India’s rupee dropped the most in a week as concern about the global economic outlook curbed demand for emerging-market assets.
The BSE India Sensitive Index, or Sensex, lost 2 percent to 16,113.48 at 11:56 a.m. in Mumbai. The gauge fell 13 percent in the three months ended Sept. 30, the worst performance since the quarter ended December 2008, amid concern the Reserve Bank of India’s record interest-rate increases will erode earnings. India’s manufacturing grew in September as the slowest pace in 2 1/2 years as higher borrowing costs cooled consumer demand, a report by HSBC Holdings Plc and Markit Economics showed today.
“Depreciation of the rupee could be dangerous given that we’re net importers of commodities,” said Neelakantan Sethuram Iyer, chief investment officer at Daiwa Asset Management India Pvt., in an interview to Bloomberg UTV today. “Slowing down of economic growth is definitely a concern.”
India imports more than 75 percent of its fuel needs, and buys commodities including pulses, edible oils, natural rubber and some grades of steel from overseas.
The rupee weakened 1 percent to 49.49 per dollar as of 10:10 a.m. in Mumbai. It fell 8.7 percent last quarter, the worst performance since 1992.
The RBI raised its repurchase rate for a 12th time since March 2010 on Sept. 16 to contain prices that are rising the fastest among so-called BRICS nations. Inflation climbed to a 13-month high of 9.78 percent in August, while food costs rose for the first time in four weeks last week. The bank meets Oct. 25 for its next policy review.
The Purchasing Managers’ Index was at 50.4 from 52.6 in August, HSBC Holdings and Markit Economics said today in an e- mailed statement. That’s the weakest reading since March 2009. A number above 50 indicates expansion.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. declined 2.1 percent to 4,841.55.
ICICI Bank tumbled 3.8 percent to 845.05 rupees. State Bank of India Ltd. slid for a fourth day, losing 2.4 percent to 1,865.7 rupees. HDFC Bank Ltd. lost 2.7 percent to 455 rupees.
Bharat Heavy Electricals Ltd., the nation’s largest maker of power equipments, fell 2.1 percent to 320.9 rupees, the most since Aug. 19, after it filed documents with the regulator in preparation for a 5 percent stake sale by the government, two people with knowledge of the matter said Sept. 30.
Sterlite Industries India Ltd. dropped 3.3 percent to 110 rupees, set for the lowest close in more than two years, after the nation’s biggest copper producer reduced prices of copper cathodes by 9.5 percent to 402,876 rupees a metric ton. Jindal Steel & Power Ltd. tumbled 4.6 percent to 482.6 rupees, set for the lowest close since Aug. 26.
European finance ministers meeting in Luxembourg today will grapple with how to shield banks from the debt crisis and mull a further boost to the region’s rescue fund. The Greek government said yesterday it approved 6.6 billion euros ($8.8 billion) of austerity measures. U.S. factory output grew last month at the slowest pace since July 2009, a report today may show, while the Tankan survey showed sentiment among Japan’s largest manufacturers remains worse than before the March earthquake.
“What is not in the price now is a continued recession scenario, which may come in global economies,” K. Ramanathan, chief investment officer at ING Investment Management, said in a Bloomberg UTV interview. “Inflation, interest-rate increases and a domestic slowdown have been accounted for. Estimates for earnings growth have been brought down significantly.”
Infosys Ltd., India’s second-biggest software-services provider, will report results on Oct. 12, the first company in the Nifty to post earnings for the quarter ending Sept. 30.
Profits for 47 percent of Sensex companies missed analyst estimates in the three months ended June 30, compares with 33 percent that lagged behind forecasts in the previous quarter, data compiled by Bloomberg show.
Overseas funds bought a net 2.52 billion rupees ($51.5 million) of Indian stocks on Sept. 28, paring their outflow from local equities this year to 2.92 billion rupees, data on the market regulator’s website show. Foreigners withdrew a net $2.4 billion in August, the most since October 2008.
“What would concern a foreign investor is that we are not done with the interest-rate hikes,” said Daiwa’s Iyer. “There may be another 25 basis points increase” on Oct. 25, he said.
--With assistance from Shikhar Balwani in Mumbai. Editor: Ravil Shirodkar
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