‘Brexit’, Fed fears hit Sensex, rupee

Stocks fall for 3rd day, rupee Asia’s worst performer

INDIAN stocks capped their steepest three-day drop in six weeks and volatility climbed as growing anxiety over the outcome of the “Brexit” vote sapped demand for riskier assets and investors awaited monthly inflation data. The Sensex lost 0.9% to 26,396.77 points at the close in Mumbai, bringing its three-day decline to 2.3%.

India’s rupee posted its biggest decline in more than three weeks on concerns foreign funds will cut equity holdings after losses in local stocks deepened. The rupee weakened for a third day, retreating 0.6% to 67.14 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. That took its loss in 2016 to 1.5%, Asia’s worst perfor mance.

The MSCI Asia Pacific Index sank 2% as a poll showing a 10-percentage-point lead for Britain to exit the European Union sent jitters through regional markets. Economists predict a vote for so-called Brexit will send the pound to the lowest level in more than three decades, while a victory for the ‘Remain’ camp would drive the currency toward the highest this year.

The US Federal Reserve is seen leaving interest rates unchanged on Wednesday though investors will scrutinise its post-meeting statement for signals on the timing of the next increase in US borrowing costs. Most economists expect the Bank of Japan to expand record monetary stimulus in July rather than on June 16, a Bloomberg survey shows.

Recent polls indicating the UK’s June 23 referendum on EU membership is too close to call is spurring fear in global investors already on the edge given the monetary-policy reviews in the US and Japan. Indian sovereign bonds dropped ahead of the inflation data. The yield on notes due January 2026 climbed three basis points to 7.53%, its highest close since March 16, according to prices from the central bank’s trading system. That’s the biggest advance since April 21.

Foreign investors bought $32.8 million more Indian shares than they sold on June 10, the smallest inflow in four days, data compiled by Bloomberg show. That’s the 13th straight day of buying, taking net purchases since April 1 to $1.6 billion. The Sensex’s 10-day historical volatility index, a gauge of price swings, has rebounded from a seven-month low reached last week.

India’s benchmark index completed a weekly decline on Friday, ending two weeks of advances, as investors turned cautious before events including central bank meetings in the US and Japan that could roil markets. The gauge has risen 15% from a low reached in February.

ICICI Bank and State Bank of India, the nation’s top lenders, were among the biggest losers on the S&P BSE Sensex. Tata Motors, the owner of Jaguar Land Rover, posted the largest drop in a month. Bharat Heavy Electricals, India’s biggest power-equipment maker, retreated the most in two weeks. Tata Steel slid for a second day.