Mumbai : India's benchmark stock index fell to a one-month low and the rupee climbed after the central bank unexpectedly increased its main interest rate to curb inflation and steady the currency. Maruti Suzuki India had the steepest decline in 18 months after posting profit that missed estimates. Axis Bank slid to a two-month low, dragging down a gauge of lenders for a fourth day. Sun Pharmaceutical Industries dropped the most since November 21 . The rupee rose from a two-month low. The S&P BSE Sensex retreated 0.1 per cent to 20,683.51, the lowest close since December 17 . The gauge erased an intraday gain of 0.4 per cent after Reserve Bank of India Governor Raghuram Rajan raised the policy rate to 8.0 per cent from 7.75 per cent, a decision predicted by only three of 45 analysts in a Bloomberg survey. The Sensex plunged the most in five months on Monday amid a drop in emerging-market equities and currencies. "I am astonished at the decision," Aneesh Srivastava , chief investment officer at IDBI Federal Life Insurance , said by phone from Mumbai . "It seems like RBI's decision is aimed at defending the currency." A RBI panel last week proposed adopting a 4.0 per cent target for consumer-price gains by 2016, signalling a need for elevated borrowing costs to stem inflation that's running close to 10 per cent even as the economy struggles. Further tightening isn't anticipated if retail inflation slows to 8.0 per cent by March 2015 , the central bank said. Consumer prices rose 9.87 per cent in December, compared with a 11.2 per cent gain in November. Play safe "The RBI is playing it safe with inflation and is making sure that the downward trajectory continues," Shishir Bajpai , director, wealth advisory, at IIFL Wealth Management, said in a phone interview. IIFL is still betting on stocks most-tied to the economy because it expects borrowing costs to ease over the next 12 months, he said. Maruti plunged 8.0 per cent to Rs1,566 . Net income at Suzuki Motor Corp.'s unit climbed 36 per cent to Rs6.81 billion ( $108 million ) in the December quarter, missing the Rs6.94 billion median of 39 analysts in a Bloomberg survey. Ten out of 11 Sensex companies that have posted earnings for the December quarter so far have beaten or matched analyst estimates, according to data compiled by Bloomberg . Axis Bank declined to the lowest level since November 28 , the worst performer on the S&P BSE India Bankex Index. The rupee climbed 0.9 per cent to 62.5150 per dollar. It fell as low as 63.3050 on Monday, the weakest since Nov. 14 . The currency has declined about 14 per cent in the past year, adding to price pressures by raising the cost of imports. Global investors sold a net $208 million of local shares on January 27 , the biggest outflow since August 27 , data compiled by Bloomberg show. They invested $20 billion last year, the most in Asia after Japan . Net purchases in 2012 were $24.6 billion , the data show. The CNX Nifty Index on the National Stock Exchange of India fell 0.2 per cent to 6,126.25. The Sensex has lost 2.3 per cent this year.
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