Sensex Poised for Third Weekly Decline, Interest-Rate Concerns

India’s benchmark stock index fell for the eighth time in nine days as higher-than-expected growth in factory output intensified concerns of a further increase in borrowing costs, and as Asian equities declined.

Tata Motors tumbled 5.8 percent after the owner of Jaguar Land Rover reported first-quarter net income of 20 billion rupees, which lagged behind the 21.6 billion-rupee median of 32 analysts’ estimates compiled by Bloomberg. Industrial output growth unexpectedly accelerated in June, rising 8.8 percent from a year ago following a revised 5.9 percent gain in May, a government report showed today. Wipro Ltd. (WPRO), the third-largest software services exporter, sank 3.6 percent.

The Bombay Stock Exchange Sensitive Index, or Sensex, lost 224.27, or 1.3 percent, to 16,835.13 at 12:55 p.m. in Mumbai, after swinging between gains and losses at least 12 times. The gauge has lost 2.8 percent this week, set for a third straight weekly decline. The S&P CNX Nifty Index slid 1.4 percent to 5,065.40. The BSE 200 Index dropped 1.1 percent to 2,101.12.

The Sensex has lost 18 percent so far this year, the worst performer after Brazil’s Bovespa Index among major indexes in the 10 biggest markets, on concern that higher borrowing costs will erode earnings. Companies on the gauge are valued at 13.9 times estimated earnings, compared with a multiple of 9.8 for the MSCI Emerging Markets Index.

Asian stocks retreated for a second day, with technology and electronics companies leading the decline. U.S. stock-index futures dropped 1 percent at 3:05 p.m. in Tokyo.

About $6.77 trillion has been erased off from the value of global equities since July 26 after S&P cut U.S.’s debt for the first time, riots swept across Britain and Europe’s debt crisis deepened. Data today showed French economic growth stalled last quarter, ahead of reports that may show euro-region factory output was unchanged in June and U.S. consumer confidence weakened.

Emerging-market equity funds posted the third-largest weekly outflows on record with withdrawals of $7.7 billion in the week ended Aug. 10, Citigroup Inc. analysts led by Markus Rosgen said in a report today, citing figures compiled by EPFR Global. That took total outflows for the year to $14 billion, according to Citigroup.

Tata Motors sank 5.8 percent to 800 rupees, the steepest decline on the Sensex today. Wipro tumbled 3.6 percent to 340.30 rupees, on course for its lowest close since October 2009, while its larger rival Tata Consultancy Services Ltd.lost 3.3 percent to 946.60 rupees.

Earnings for the three months ended June reported by 11 out of 23 Sensex companies, or 48 percent, have lagged behind analyst estimates, according to Bloomberg data. That compares with 33 percent that missed forecasts in the previous quarter.

The median of 23 estimates in a Bloomberg News survey forecast factory output to grow 5.5 percent. The expansion comes after government data yesterday showed India’s food costs accelerated to a three-month high in the week ended July 30. That maintains pressure on the Reserve Bank of India, which has raised its repurchase rate 11 times since the start of 2010, to continue tightening even amid the risk of a global downturn.

Foreign investors bought a net 2.49 billion rupees worth of local equities on Aug. 10, increasing their investments in stocks this year to 47.8 billion rupees, data on the website of the market regulator.