Business | Markets
Concern over monetary policy pulls India stocks down
Interest rates may increase in India due to faster economic growth
- Bloomberg
- Published: 00:00 September 1, 2010
Mumbai: India's benchmark stock index fell to a one-month low amid concern the fastest economic growth in two-and-half years may increase pressure on the central bank to extend the most aggressive round of monetary-policy tightening in Asia.
State Bank of India, the nation's biggest lender, dropped to its lowest level in three weeks. The economy grew 8.8 per cent in the three months through June from a year earlier, the Central Statistical Organisation said in a statement in New Delhi yesterday. Jaiprakash Associates Ltd., a builder of power plants, slid to its lowest since May 2009.
The Bombay Stock Exchange's Sensitive Index, or Sensex, lost 60.99, or 0.3 per cent, to 17,971.12. The gauge added 0.6 per cent this month, its third consecutive such gain. The S&P CNX Nifty Index on the National Stock Exchange fell 0.2 per cent to 5,402.40. The BSE 200 Index retreated 0.4 per cent to 2,302.88.
"Interest rates may increase in India, but we're not expecting very high rates because of global uncertainty," said Gopal Agrawal, head of equities at the local office of Mirae Asset Financial Group in Mumbai, which has $2.5 billion invested in India.
"There is no sector we are avoiding as structurally there's no concern with the economy. It's mostly stock specific based on valuations." He declined to name companies. Agrawal expects a 25 basis points increase in rates in the central bank's next monetary policy statement on September 16.
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