Indian stocks declined the most in almost three months amid a global selloff and concern inflows to emerging markets will be curtailed if the U.S. raised interest rates. Lenders and material producers led the retreat.
The MSCI Asia Pacific Index dropped 2.1 percent on Monday. The losses follow a 2.5 percent tumble on the S&P 500 Index on Friday as volatility surged after Federal Reserve Bank of Boston President Eric Rosengren said the economy could overheat if policy makers waited too long to raise interest rates, spurring bets on an increase by the end of the year. The S&P BSE Sensex climbed to an 18-month high last week as foreign investors pumped in $6.4 billion into local stocks this year.
INDEX CHANGE MOST SINCE Sensex -1.5% June 24 Nifty -1.5% June 24 S&P BSE MidCap -2.2% Feb 16 S&P BSE SmallCap -1.5% March 28 S&P BSE Bankex -2.3% June 24
"There is a realization that the only thing holding up asset prices is the central bank induced asset inflation," Shankar Char, a senior vice president at Antique Stock Broking Ltd. in Mumbai, said by phone. "We could see some of the over-bought sectors like autos and private banks taking quite a beating."
- Axis Bank Ltd. and Adani Ports & Economic Zone Ltd. were the top losers on the Sensex.
- Yes Bank Ltd. plunged 4.5 percent, extending a four-day loss to 15 percent.
- Reliance Defence & Engineering Ltd. slid 4.2 percent after reporting a loss in the first quarter.
- Housing Development & Infrastructure Ltd. plunged 6.8 percent after its first-quarter profit fell 30 percent from a year earlier.
The Sensex is valued at 16.3 times projected 12-month profits compared with 12.3 times for the MSCI Emerging Markets Index. The markets are closed on Tuesday for a public holiday.