Economy Teeters as Indian Markets Plunge

India’s biggest stock market slide in almost two years, surging bond yields and an unprecedented plunge in the rupee are pressuring officials for fresh steps to stem capital outflows and revive a struggling economy.

The S&P BSE Sensex (SENSEX) Index sank 4 percent on Aug. 16 as the rupee touched an all-time low of 62.005 per dollar. The yield on the government bond due May 2023 rose 39 basis points to 8.88 percent, the highest on a 10-year note since 2011.

The market rout underscores the failure of months of measures to contain outflows, from higher interest rates to gold import curbs. Foreigners sold a net $3 billion of Indian stocks and bonds in July as the slowest growth in a decade made Asia’s third-largest economy vulnerable to a pullout of funds from emerging markets, spurred by speculation the U.S. Federal Reserve will cool stimulus.


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