Active Stocks
Tue Mar 19 2024 11:11:02
  1. Tata Consultancy Services share price
  2. 4,021.65 -2.97%
  1. Tata Steel share price
  2. 148.00 -1.07%
  1. Power Grid Corporation Of India share price
  2. 262.85 -0.81%
  1. NTPC share price
  2. 311.95 -1.64%
  1. ITC share price
  2. 412.50 -1.17%
Business News/ Market / Stock-market-news/  Sensex drops most in eight weeks as inflation accelerates
BackBack

Sensex drops most in eight weeks as inflation accelerates

The Sensex lost 0.92%, or 207.70 points, to 22,277.23, the most since 13 February

Concern RBI may keep interest rates elevated after consumer prices rose in March weighed on investor sentiment. Photo: Mint Premium
Concern RBI may keep interest rates elevated after consumer prices rose in March weighed on investor sentiment. Photo: Mint

Mumbai: Indian stocks fell for a third day amid concern the central bank may keep interest rates elevated after data showed consumer prices quickened last month for the first time since November.

Engineering company Larsen and Toubro Ltd (L&T) fell the most in three months. Infosys Ltd dropped to a six-month low, pacing losses in a gauge of software exporters. Housing Development Finance Corp. Ltd declined for a third day. Tata Power Co. Ltd had its biggest three-day retreat since 7 January.

The S&P BSE Sensex lost 0.92%, or 207.70 points, to 22,277.23 at the close, the most since 13 February. Consumer prices climbed 8.31% in March from a year earlier, government data showed after trading ended Tuesday. Wholesale prices also rose more than estimated. Reserve Bank of India (RBI) governor Raghuram Rajan has raised the benchmark interest rate 75 basis points since taking charge in September to curb price rises. The next policy review is due 3 June.

“The rise in wholesale and retail inflation is fuelling speculation that the RBI may not be able to bring down interest rates," R.K. Gupta, managing director of New Delhi-based Taurus Asset Management Co., said by phone on Wednesday. Also some investors are booking profits in stocks that have run up.

L&T lost 2.9%, the most since 3 January. Bharat Heavy Electricals Ltd (Bhel) fell 3.17% to the lowest since 6 March.

Infosys slid 3.2%. Bigger rival Tata Consultancy Services Ltd dropped 2.51%. The company said after trading ended that net income jumped 51% to 5300 crore in the quarter ended 31 March a year earlier. That compared with the 5,240 crore median of 39 analysts’ estimates compiled by Bloomberg.

‘Still weak’

Tata Power tumbled 3.6%, extending the two-day, 5.3% retreat.

The Sensex rose to a record on 10 April on expectations a victory by the opposition Bharatiya Janata Party (BJP) will produce a majority government with the mandate to spur economic growth. Overseas investors have bought a net $4.8 billion of local shares this year, the most in Asia, data compiled by Bloomberg show.

“The fundamental situation still remains weak with high inflation and interest rates," Tushar Pradhan, who manages about $1 billion as the chief investment officer at HSBC Asset Management (India) Pvt. Ltd, told Bloomberg TV India on Wednesday. “The market is not overheated, but people are placing their bets ahead of how the economy will shape up in the near future."

India’s economy grew 4.9% in the year ended 31 March, after decade-low growth of 4.5% the prior year, the statistics ministry estimates. Official data last week showed factory output shrank 1.9% in February from a year ago, while exports declined 3.2% to $29.6 billion in March.

The Sensex has risen 5.2% in 2014 and trades at 14.1 times projected 12-month profits, in line with the average multiple over the past five years. The MSCI Emerging Markets Index has lost 0.3% in 2014 and is valued at 10.4 times.

Overseas funds sold a net $68.8 million of Indian shares on 11 April, the first daily outflow in a month, according to data compiled by Bloomberg. That took this year’s purchases to $4.76 billion, the second-highest among eight Asian markets tracked by Bloomberg, after Taiwan. Bloomberg

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Apr 2014, 10:10 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App