Stocks in Indian dove sharply Friday, breaking through the psychologically important 15,000 level, after investors reacted negatively to government data that showed inflation soared to a 13-year high. India's wholesale price index (WPI) rose 11.05% for the week ending on June 7, vs. 8.75% the previous week. The WPI reading was well above the target that most analysts had expected, fueling further speculation that the Reserve Bank of India (RBI) will hike interest rates and enact a strong rupee policy to fight skyrocketing inflation. "Given the current rate of inflation and the full impact of the fuel-price hike, it would be dangerous for the RBI to let the local currency depreciate further as it could exacerbate pressures on inflation," said HDFC Bank's chief economist Abheek Barua. The Bombay Stock Exchange's Sensex Index dropped 516.70 points, or 3.4%, to 14,571.28, which marks the index's lowest close since August 2007. Here's a look at how some India-based American depositary shares traded in the U.S. on Friday. The Bank of Nova Scotia ( BNS), Canada's third biggest bank, announced an agreement to establish a relationship with Indian banking giant HDFC Bank ( HDB) to offer services to Indian citizens immigrating to Canada as well as to Canadian customers looking to open accounts in India. Under the agreement, which is expected to be signed shortly, the banks will refer customers to each other on a best-efforts basis. HDFC Bank also announced it has raised its benchmark prime lending rate by 25 basis points to 15.25% and hiked its deposit rates by 25 basis points, effective from June 18. American depositary shares of HDFC Bank, which trade on the NYSE, dropped 4.4% to $79.77 along with other financial stocks in the U.S. Friday.
Goldman Sachs downgraded Cognizant Technology ( CTSH) a U.S.-based information technology company with large exposure to the Indian market, to neutral from buy and removed the stock from its Americas buy list citing valuation. Goldman analyst Julio Quinteros Jr. said the stock has reached a fair price and is unlikely to trade higher in the near term. Despite the downgrade, Quinteros kept his price target of $38 for the stock. He also said he sees more upside in Hyderabad-based Saytam Computer ( SAY) for investors who want to play the Indian IT outsourcing sector. Shares of Saytam, however, dove 5.8% to $25.20, and shares of Cognizant dipped 4.7% to $34.97. Some big decliners among Indian ADRs Friday were Wipro Limited ( WIT), which lost 7.4% to $12.48; ICICI Bank ( IBN), which fell 5.7% to $33.54; Tata Communications ( TCL), which plunged 5.6% to $18.41; and Sterlite Industries ( SLT), which finished 4.6% lower to $17.74. Be sure to check out the Far East Portfolio at Stockpickr.com every night to find out which stocks in India and China are making big moves and announcing major news.