Mumbai: Indian stocks declined the most in almost three months amid a global sell-off and concern inflows to emerging markets will be curtailed if the US raised interest rates. Lenders and material producers led the retreat.
The S&P BSE Sensex has retreated 2.4 per cent after reaching an 18-month high last week as foreign investors pumped in $6.4 billion into local stocks this year. Shares in Europe and Asia dropped the most since the aftermath of the UK. Brexit vote in June, and US stock-index futures fell as concern spread that central banks are preparing to wean markets off unprecedented stimulus.
“There is a realisation that the only thing holding up asset prices is the central bank induced asset inflation,” said Shankar Char, a senior vice president at Antique Stock Broking Ltd. in Mumbai. “We could see some of the overbought sectors like autos and private banks taking quite a beating.”
Lael Brainard, a member of the US. Federal Reserve’s board of governors, speaks Monday in Chicago, days after Fed Bank of Boston President Eric Rosengren said the economy could overheat. European Central Bank President Mario Draghi last week played down the prospect of further stimulus and the Bank of Japan is set to unveil the results of a comprehensive policy review at its Sept. 20-21 meeting.
The Sensex is valued at 16.3 times projected 12-month profits compared with 12.2 times for the MSCI Emerging Markets Index. The Indian markets are closed on Tuesday for a public holiday.
