Sensex declines 1.1% over rate hike concerns

Indian stocks ended a three-day rally on concern the central bank may extend a record series of increases in borrowing costs to tackle inflation even amid signs growth is slowing. The BSE India Sensitive Index, or Sensex, fell 1.1 per cent to 16,745.35, the most since September 12, at the 3.30pm close in Mumbai. The measure advanced for a third straight week in the five days ended September 16, gaining 0.4 per cent. Sun Pharmaceutical Industries fell 2.6 per cent after saying the US Food and Drug Administration has resolved its warning letter after re-inspecting the company\'s plant in New Jersey. Maruti Suzuki India jumped 2.8 per cent after the Spiegel magazine cited an unidentified Volkswagen AG manager saying he doesn\'t rule out a purchase of Suzuki Motor if the tie-up between the two carmakers ends. Volkswagen views Suzuki as a separate entity, VW spokesman Michael Brendel said. He declined to comment on the Spiegel article. \"Inflation continues to stay high and is likely to spike up further after last week\'s fuel-price hike,\" Prakash Diwan, head of research with Networth Stock Broking, said. \"We expect another rate hike of 25 to 50 basis points in the RBI\'s meeting next month.\" The Reserve Bank of India raised its repurchase rate September 16 for a 12th time since March 2010, a move that contrasts with Brazil and Russia, which cut borrowing costs in the past month, while China has paused rate increases since early July.