BSE Sensex gave up all morning gains. (Photo: Reuters)

Indian Stocks Drop, Longest Losing Streak in Over Three Months

(Bloomberg) -- Indian stocks fell, with the benchmark equity gauge clocking its longest string of losses in more than three months, as investors weighed the outlook for Asia’s best performing major stock market this year against sustained weakness in the local currency, which may burden economic growth.

The S&P BSE Sensex retreated 0.4 percent to 38,157.92 in Mumbai, its fifth day of losses from a record high on Aug. 29. Seventeen of 19 sector sub-indexes compiled by BSE Ltd. declined, led by losses in consumer and basic material company stocks. Exporters rose the most on the main measure, paced by Infosys Ltd. and Tata Consultancy Services Ltd., as the weaker rupee boosts the local value of their sales abroad.

Asian Paints Ltd. and State Bank of India were the worst performers on the benchmark gauge, dropping at least 3.2 percent. The nation’s largest consumer company Hindustan Unilever completed its biggest two-day fall since January 2013.

A gauge of mid-cap companies dropped 2.6 percent, its sharpest fall since February.

“Concerns about the rupee weighing on the economic outlook and short-term valuations are hurting stocks today,” Deven Choksey, managing director at KR Choksey Shares & Securities Pvt., said by phone from Mumbai.

While there’s optimism that economic growth topping 8 percent will help power India equities higher in the coming months, lingering external risks, most notably from the price of oil -- and its impact on the rupee -- as well as stretched valuations are giving some investors pause. The local currency is the worst performer among major Asian currencies this year, increasing the cost of imported fuel, while boosting the competitiveness of exporters. It touched a record low of 71.5375 versus the dollar.

Here’s what analysts are saying on equities:

  • Indian Non-Bank Financials Slide on Higher Rates, Rupee Concerns
  • Hindustan Unilever Leads Consumer Drop as Gains Seen Overdone
  • Fears of India Outflows on Foreigner Rules ’Preposterous’: Sebi

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