Mumbai: Indian stocks fell the most in more than two weeks after the central bank signalled it may increase rates to control inflation at its meeting next month.
HDFC Bank, the third-biggest lender, dropped the most in two weeks. The central bank's "compulsions" to cool prices are strong, Deputy Governor Subir Gokarn said on Tuesday ahead of the next monetary policy announcement on May 3. Mahindra & Mahindra Ltd., the largest maker of sport-utility vehicles and tractors, declined for a second day.
"It's a given that interest rates will harden," Manish Sonthalia, who manages $300 million in equities for wealthy individuals at Motilal Oswal Securities Ltd. in Mumbai, said by phone. "If inflation remains at the level we are seeing, there will be a dent in profit margins." The Bombay Stock Exchange Sensitive Index, or Sensex, lost 74.62, or 0.4 per cent, to 19,612.20. The measure reached a three-month high on April 4. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.4 per cent to 5,891.75, and its April futures settled at 5,912. The BSE 200 Index retreated 0.2 per cent to 2,421.02.
HDFC Bank lost 0.8 per cent to Rs2,375.95, and its April futures settled at Rs2,387.15. The Bombay Stock Exchange BANKEX Index of 14 lenders declined for a second day, losing 0.4 per cent to 13,351.89. ICICI Bank Ltd., the country's second-biggest lender, dropped 1 per cent to Rs1,100.50.
Mahindra fell 0.9 per cent to Rs726.65. Maruti Suzuki India Ltd., the biggest carmaker, lost 1 per cent to Rs1,297.5, and its April futures settled at Rs1,295.60.
