How India lost 'best-performing stock mkt in Asia' tag in less than a month

The best-performing stock market in Asia for much of this year has lost that title in less than a month.

As the S&P BSE Sensex Index sank into a correction Friday, posting its biggest weekly plunge in more than two years, investors began paying up to hedge against more declines. The cost of bearish NSE Nifty 50 Index options jumped to its highest level since August of last year relative to the price of bullish contracts, data compiled by Bloomberg show.

Volatility in Indian stocks started spiking at the end of August and hit on Friday its highest level since February as traders digested a long list of reasons to sell:

— The rupee is Asia’s worst currency this year and slumped even further on Friday after the Reserve Bank of India chose to keep its interest rates unchanged and lowered its inflation forecast for the second half of the year ending March

— A steady climb in the price of oil -- India’s biggest import -- and the government’s request that state-run refiners absorb a portion of sweeping fuel price cuts have raised speculation that price controls may be reintroduced

— A recent default by a major infrastructure financier prompted the RBI to caution non-bank lenders about relying too much on short-term borrowings and warned to brace for tighter regulations.