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Business News/ Market / Stock-market-news/  Sensex halts two weeks of advance before Fed, Brexit
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Sensex halts two weeks of advance before Fed, Brexit

Indian stocks fall in a volatile trading, tracking declines around the world, as investors turned cautious before key events including the Fed meeting

The Sensex lost 0.5%, or 127.71 points, to 26,635.75 at the close in Mumbai, its second day of losses. Photo: ReutersPremium
The Sensex lost 0.5%, or 127.71 points, to 26,635.75 at the close in Mumbai, its second day of losses.
Photo: Reuters

Mumbai: Indian stocks fell in a volatile trading, tracking declines around the world, as investors turned cautious before key events including the US Federal Reserve meeting.

Tata Motors Ltd, the owner of Jaguar Land Rover, dropped for the first time in seven days. Infosys Ltd, the second-largest software services provider, was the top loser this week on the S&P BSE Sensex. State Bank of India (SBI) slid for a second day. Tata Steel Ltd fell the most in about three weeks.

The Sensex lost 0.5%, or 127.71 points, to 26,635.75 at the close in Mumbai, its second day of losses. It earlier rose as much as 0.8%. The gauge slid 0.8% this week, ending two weeks of advances. The retreat comes before key events such as the Fed’s meeting next week, followed by the UK’s referendum on EU membership on 23 June, which have the potential to roil markets.

“Brexit is weighing down on the markets globally and that’s pretty much weighing on the Indian markets as well," Nitasha Shankar, vice-president for equity research at Yes Securities Ltd in Mumbai, said in an interview with Bloomberg TV India. “Fortunately, for us on a fundamental side we are placed quite strongly. So, the impact is not as significant. But until such time this event is behind us we will continue to see some kind of pressure on the index."

Global stocks

The MSCI All-Country World Index headed for its steepest two-day decline since 4 May, led by commodity producers and financial companies. The Stoxx Europe 600 Index was down 1.8%. The MSCI Asia Pacific Index lost 0.9%.

The Sensex rose to a seven-month high on Wednesday after the Reserve Bank of India (RBI) said this week it remains willing to cut borrowing costs as long as conditions allow, and as the odds of a rate increase by the Fed receded.

The Sensex has risen 16% from a low reached in February, putting India on course to become the first among markets valued at more than $1 trillion to crawl back from a bear market this year. Global investors bought more Indian shares than they sold for an 11th straight day, taking net purchases since April 1 to $1.5 billion.

Monsoon weather

India’s monsoon, which accounts for four-fifths of the country’s rainfall, reached the mainland in southern Kerala state on Wednesday. The government is counting on above-normal precipitation this year to help control food prices, boost farm production and ease a drinking-water shortage caused by back-to-back droughts. Agriculture accounts for roughly 18% of India’s gross domestic product.

The monsoon is key to sustaining India’s world-beating economic growth, which accelerated a faster-than-estimated 7.9% in the March quarter. The data cemented the nation’s position as a bright spot among emerging markets as China slows while Russia and Brazil see contractions.

Tata Motors declined 2.04%. State Bank of India slid 1.81% to pare this week’s gain to 4.8%. Tata Steel fell 2.08% and Coal India Ltd, the world’s biggest miner of the fuel, retreated 1.98%.

Infosys, which has the highest weighting on the Sensex, lost 6.8% this week, its worst performance since the five days through 12 February. The company’s chief operating officer U.B. Pravin Rao said Wednesday the company expected some “short term, quarterly bumps" in sales growth. Bloomberg

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Published: 10 Jun 2016, 09:54 AM IST
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