India’s equity benchmarks struggled to hold on to record highs on Monday and the rupee declined to an all-time low as investors worried that outflows might persist amid uncertainty over a trade deal with the United States.
These factors overshadowed the impact of better-than-expected domestic economic growth.
The Nifty 50 closed 0.1% lower at 26,175.75 points while the Sensex lost 0.08% to 85,641.9. Both the blue-chip indexes rose about 0.5% to record highs earlier in the session.
The markets had hit new peaks last week after 14 months, helped by improving earnings, easing large-cap valuations and supportive fiscal and monetary policies.
“A lack of trade deal between India and the U.S. is keeping the market from holding record high levels. If any clarity emerges on that, we will see an upmove,” said Arun Malhotra, fund manager at CapGrow Capital.
Eleven of the 16 major sectors declined on the day. The broader small-caps rose 0.3% and the mid-caps were flat.
India equity benchmarks to open higher as GDP data tops forecast
Foreign investors have net sold $425 million of Indian equities in November, marking their fourth monthly selling in five months.
India’s economy grew 8.2% in July-September, its fastest pace in 18 months, raising questions about the case for further rate easing, data showed on Friday.
The country’s central bank, which will announce its policy decision on Friday, was widely expected to cut rates.
Meanwhile, expectations of an interest rate hike in Japan later this month boosted the yen and Japanese bond yields, triggering risks to yen carry trades, where investors borrow in yen to buy higher-yielding assets.
“We are seeing profit booking at higher levels. It will remain that way as investors globally watch rising bond yields in Japan and await key interest rate decisions in U.S. and India later this month,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.
Among stocks, Lenskart Solutions rose 4.9% after reporting higher quarterly profit.
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