Indian stocks and the rupee fell the most in five weeks after monthly factory output weakened and on speculation the U.S. Federal Reserve will signal a move toward interest-rate increases at a meeting this week.
The S&P BSE Sensex (SENSEX) lost 0.8 percent to 26,839.52 at 12:21 p.m. in Mumbai, while the rupee slid 0.6 percent to 61.0075 per dollar, the weakest since Aug. 13. Aluminum producer Hindalco Industries Ltd. (HNDL) tumbled 3 percent, sending a gauge of 10 metal producers to its fourth day of losses.
Industrial-production (INPIINDY) expansion slowed 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 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.”
Hindalco headed for its lowest close since June 27, while Tata Steel Ltd. dropped to a two-month low and Sesa Sterlite Ltd. (SSLT), the nation’s biggest copper producer, lost 1.4 percent. The S&P BSE Metals Index is set for the longest losing streak in four months.
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 tracked by Bloomberg. Prime Minister Narendra Modi’s government has prioritized curbing food costs, part of a sweeping agenda that also seeks to revive economic growth from near a decade low.
Consumer prices grew 7.8 percent from a year earlier in August, versus 7.96 percent 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.
Wholesale inflation prices in August climbed 3.74 percent from a year ago, compared with 5.19 percent in July, government data showed today. The median estimate by 32 economists was 4.33 percent.
The RBI 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.
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