India’s benchmark stock index was little changed as investors weighed measures introduced by the central bank to arrest the rupee’s slump against the outcome of a European Union summit on the region’s debt crisis this week.
The BSE India Sensitive Index added 0.1% to 16,906.58 at the close. Two stocks rose for each that declined on the 30-stock index.
The Reserve Bank of India on Monday raised the amount of government debt foreign funds can hold by $5bn to halt the drop in Asia’s worst-performing major currency this year. German Chancellor Angela Merkel hardened her resistance to euro-area debt sharing, increasing concerns leaders in the EU, India’s top trading partner, will fail to agree on measures to curb the debt crisis at a two-day summit starting June 28.
“Markets will remain range bound as long as we are in this uncertain phase,” said Sreesankar Radhakrishnan, senior vice president at Tata Securities in Mumbai. “A slowdown in decision-making in the political space is not encouraging and the dithering in Europe over Greece is also not positive.”
Prime Minister Manmohan Singh is grappling with an economy hobbled by slowing growth, a record trade deficit, a budget gap that has exceeded targets, corruption scandals and in-fighting that has stymied his efforts to attract foreign investment.
The rupee touched a record low of 57.3275 a dollar on June 22, and the Sensex is headed for its first quarterly decline since the three-month period ended in December.
The rupee fell to 57.035 per dollar at close, from 57.015 on Monday. The currency has lost 7% in 2012, the worst performance among the 10 most-traded Asian currencies.
The decline has intensified price pressures because India buys 80% of its crude from abroad and undermined efforts by the government to pare the widest fiscal deficit among the largest emerging economies.