Indian stocks declined the most in three weeks, tracking global equities, as the Bank of Japan (BoJ) refrained from adding to its monetary policy stance and local monthly derivative contracts lapsed.
Cigarette maker ITC slid the most in nearly three months. Bharat Heavy Electricals, a power-equipment maker, retreated for a second day. Maruti Suzuki India and Mahindra & Mahindra were among the top losers on the S&P BSE Sensex. HCL Technologies plunged the most in 11 weeks after its earnings report.
The Sensex tumbled 1.8% or 461.02 points to 25,603.10 yesterday. The gauge has still risen 12% from a February low as the risk-on sentiment returned to Asia. There’s concern that flows into equities may slow after the BoJ held off from adding to its bond-buying program or its budget for exchange-traded stock funds. Earlier, the US Federal Reserve kept its benchmark rate unchanged following a two-day meeting.
“If a global risk-off trade gets underway, then this rally can be cut short as it has been fueled by liquidity,” DK Aggarwal, chairman of SMC Investments in New Delhi, said by phone.
Foreigners have bought $486mn of Indian shares this month, adding to last month’s inflow of $4.1bn, which was the most in three years.
US central bankers skipped an interest-rate hike for the third straight meeting since kicking off the tightening cycle in December. Their statement suggested they remain positive about the underpinnings of US growth and are less worried - though not completely reassured - about risks posed by global economic weakness and financial-market turbulence.
“After eight years of monetary easing and trillions of dollars thrown around the world, we’ve still not seen growth. That is the worrying part,” Andrew Holland, chief executive officer of Mumbai-based Ambit Investment Advisors in Mumbai, said in an interview with Bloomberg TV India.
Investors are also focused on the ongoing quarterly earnings season. So far, four out of eight Sensex companies that have ported March-quarter results beat or matched analyst estimates.
Traders rolled over 70% of the NSE Nifty 50 Index futures contracts to the May series that starts today, equal to the six-month average, data show. The monthly derivatives futures expire on last Thursday of every month. The Nifty 50 index plunged 1.7%, retreating from its highest level since November 5.
ITC tumbled 3.2%, the most since Feb. 11. Bharat Heavy decreased 2.2% to its lowest level since April 8. Maruti Suzuki and Mahindra both retreated 2.9% each.
HCL Technologies tumbled the most since February 9. While the revenue of Rs107bn in the March quarter exceeded the Rs106.7bn estimate, growth of 1.7% in constant currency term was lower than the “street expectation” of 2 to 2.2%, Rahul Jain, an analyst at Systematix Shares & Stocks India, said by phone.
Infosys, the second-largest technology company, tumbled 2.5%, while Wipro declined 1.2%.
The Sensex has gained 1% this month and trades at 15.7 times 12-month projected earnings versus 11.9 for the MSCI Emerging Markets Index. 
Meanwhile the rupee yesterday closed weaker against the US dollar, after local equity market fell over 460 points. The currency closed at 66.52, down 0.1% from its previous close of 66.45. The rupee opened at 66.38 a dollar and touched a high and a low of 66.38 and 66.55, respectively in intraday trade.
Most Asian currencies closed higher against the US dollar. Japanese yen was up 3.2%, South Korean won 0.9%, Malaysian ringgit 0.46%, China offshore spot 0.33%, China renminbi 0.32%, Singapore dollar 0.28%, Thai baht 0.21%, Taiwan dollar 0.13%, Indonesian rupiah 0.09%. However, Philippines peso was down 0.17%.
The US Federal Reserve kept interest rates unchanged on Wednesday but signalled confidence in the US economic outlook, leaving the door open to a hike in June.
India’s 10-year bond yield closed at 7.441%, as compared with its Wednesday’s close of 7.461%.
So far this year, the rupee has gained 0.55%, while foreign institutional investors has bought $1.78bn from the local equity market and sold $372.01mn in debt markets.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.877, down 0.54% from its previous close of 94.387.