India Stocks, Rupee Fall, Bonds Climb on Global Recession Fears
By Rajhkumar K Shaaw and Jeanette Rodrigues - Aug 5, 2011
Indian stocks tumbled, rupee fell and bonds climbed on concern the global economy may lapse into recession even as accelerating inflation prompts the central bank to extend interest-rate increases.
Reliance Industries Ltd. (RIL), India’s most valuable company, sank to its lowest price since April 2009. Infosys Ltd., the second-largest software maker, slid to its lowest in 14 months. The rupee is set for its biggest weekly loss in three months. The yield on the 7.8 percent bonds due April 2021 dropped 15 basis points this week, or 0.15 percentage point, to 8.31 percent, according to the central bank’s trading system.
“If there’s going to be some catastrophe in Europe or the U.S. then in the near term all global markets are going to get hit,” Sunil Singhania, head of equities at Reliance Capital Asset Management Ltd., India’s biggest money manager, said in an interview. Reliance Mutual Fund has $23 billion in assets.
The Bombay Stock Exchange Sensitive Index, or Sensex, lost 387.31, or 2.2 percent, to 17,305.87, the lowest since June 11, 2010, at the 3:30 p.m. close in Mumbai. The gauge retreated 4.9 percent this week, the most since October 2009. The S&P CNX Nifty Index lost 2.3 percent to 5,211.25. Its August futures settled at 5,220. The BSE 200 Index sank 2.1 percent.
Global stocks sank for an eighth day, the longest losing streak since January 2010, and commodities fell, erasing the Standard & Poor’s GSCI index’s gains for the year, on concern the U.S. recovery is faltering. Bonds jumped, driving Treasury 10-year yields to a 10-month low.
The U.S. added 85,000 jobs last month, leaving the 9.2 percent unemployment rate unchanged, according to economists surveyed before data today that will cap a week of economic reports that showed the recovery is slowing.
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