Sensex Extends Loss After Worst Week Since June as Rupee Slides

(Bloomberg) -- Indian stocks fell, extending their drop from last week, as the slide in the rupee amid a selloff in emerging-market assets threatened to slow economic growth and dent a recovery in company earnings.

The S&P BSE Sensex lost 1.2 percent to 37,922.17 at close in Mumbai, its biggest daily drop since March. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, with utilities sliding 1.3 percent on a proposal to change laws governing their business. Axis Bank Ltd. gained the most on the gauge after appointing a new chief executive officer. The equities benchmark retreated 0.7 percent last week, its worst performance since the last week of June. The rupee weakened to a fresh low as the U.S. threatened to impose more tariffs on Chinese goods.

“The weak rupee remains an overhang on earnings growth outlook and stretched valuations,” Soumen Chatterjee, head of research at Guiness Securities Ltd. in Kolkata, said by phone.

India’s benchmark is trading at 18.6 times 12-month forward earnings, compared to 11 times for its emerging market peer. 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 -- and stretched valuations are giving some investors pause. A slide in emerging market stocks has also raised concerns of contagion.

©2018 Bloomberg L.P.