Foreign investors sold a net $241 million worth of Indian stocks so far this week, contributing to a 0.46% decline in the rupee to 73.90 against the U.S. dollar. Meanwhile the yield on the benchmark 10-year government bond was little changed at 5.99%.
While the slump in stocks dragged down every industry, the S&P BSE Bankex, a gauge of bank stocks, fell further than the benchmark index to a three-month low.
“Banks will continue to under-perform in the next couple quarters,” said Amit Khurana, head of research at Dolat Capital Market Pvt. in Mumbai, “Bad loans will go up and they will be more retail and granular, which will be far more difficult to address than corporate loans.”
Emerging markets are not immune to what happens on Wall Street because the rebound in the Dollar retracts support from international assets. Additionally, the move by the Modi administration to liberalise how farmers are allowed to sell their produce represents an inflationary uncertainty.Click HERE to subscribe to Fuller Treacy Money Back to top