Indian stocks fell to the lowest in more than a month on concerns the government may face further roadblocks to its economic reform agenda and amid fresh signs Greece may exit the euro.
The rupee meanwhile fell the most in a month as investors sought the perceived safety of the dollar on concern Europe’s debt crisis will worsen.
“Weak global cues will continue to negate the effect of policy reforms by the government,” Pramit Brahmbhatt, Mumbai- based chief executive officer at the Indian unit of Alpari Financial Services, wrote in a research note. “With dark clouds over the global economy, the Indian markets too shall clamp down.”
The rupee declined 1.2% to 55.9750 per dollar in Mumbai, the biggest drop since June 22, according to data compiled by Bloomberg. It touched 55.9800 earlier, the weakest level since July 9.
The Bombay Stock Exchange Sensitive Index, or Sensex, fell 1.6% to 16,877.35 at the close in Mumbai, the lowest since June 19.
Six Indian political parties wrote a joint letter to Prime Minister Manmohan Singh on July 21 asking the government not to revive a plan to allow overseas retailers including Wal-Mart Stores to open supermarkets.
The MSCI Asia Pacific Index dropped on concern China’s economic growth will slow and after German Vice Chancellor Philipp Roesler said he’s “very skeptical” that leaders in the European Union, India’s largest trading partner, will be able to rescue Greece.
“Political resistance to economic reforms is going to hurt market sentiment,” Sadanand Shetty, a senior fund manager at Taurus Asset Management Co, which has about $671mn in assets, said by phone. “There is expectation that the government will break free from its policy paralysis. If they don’t deliver now, we will be in for some trouble.”
from gulf times.