Indian markets slip

Mumbai: Indian stocks dropped for the second day, paring a weekly advance, after central banks in Europe and the U.S. this week failed to announce immediate measures to bolster a slowing global economy.

Sterlite Industries (India) Ltd, the biggest copper and zinc maker, sank 2.8 per cent, leading its peers lower. Lender ICICI Bank Ltd fell for a fourth day. The BSE India Sensitive Index slid 0.1 per cent to 17,206.38, according to preliminary closing prices, paring this week’s rally to 2.2 per cent.

ECB President Mario Draghi yesterday declined to intervene in bond markets, and the U.S. Federal Reserve a day earlier refrained from adding fresh stimulus. The European Union is India’s top trading partner, according to the trade ministry. The Thomson Reuters/Jefferies CRB Index of raw materials fell 1.6 per cent 294.50, the lowest since July 13.

“Statements from the eurozone are not very encouraging,” Vaibhav Sanghvi, director of investment advisory at Ambit Capital in Mumbai, said by phone. “Commodities are correcting, which shows some sort of risk-off trade is in play.”

Reserve Bank of India Governor Duvvuri Subbarao left the benchmark repurchase rate unchanged at 8 per cent for a second meeting on July 31. The RBI raised its inflation forecast to 7 per cent as a drop in the rupee, infrastructure bottlenecks and higher food costs stoke price pressures, a trend that may be worsened by the impact of the deficient monsoon rains.

India’s monsoon, which accounts for more than 70 per cent of total rainfall, may be 85 per cent of a 50-year average in the June-September season, the weather office said today.

Prime Minister Manmohan Singh is struggling to revive an economy growing at the slowest pace in almost a decade. Still, the Sensex has advanced 11 per cent since this year as foreign funds bought a net $10.6 billion of stocks on optimism Singh will hasten economic reforms. The flows are the highest in Asia in 2012, data compiled by Bloomberg show.

Foreign funds bought a net 6.31 billion rupees of stocks on Aug. 1, taking their investments this year to 538.2 billion rupees, data from the regulator show.