India's Most Valuable Companies Shed Value as Central Bank Cuts Growth Outlook

Seven of India's ten most valuable listed companies lost a combined 1.25 lakh crore rupees in market value last week, the Economic Times reported, as benchmark indices ended lower. One lakh crore equals one trillion rupees.

The selling followed the Reserve Bank of India's decision to hold its policy rate steady while raising its inflation forecast and lowering its growth projection, a combination that unsettled investors. Weak signals from United States and European markets and continued selling by foreign institutional investors are expected to shape trading on Monday, the paper said.

The central bank paired its rate decision with supportive liquidity measures that helped steady the rupee, even as equities stayed under pressure. The dominant worry for Indian portfolios is the oil price, since the country imports most of its crude and a sustained shock would widen its trade deficit and increase inflation.

India's predicament captures the wider problem the Hormuz closure has created. An economy with strong domestic growth is exposed to an external supply shock it cannot control, and its central bank must choose between defending the currency and supporting expansion.