Reuters/Mumbai
India’s NSE index rose for a third consecutive session yesterday, hitting its highest in about 1-1/2 weeks, as cash-rich exporters such as Tata Consultancy Services surged on hopes of being better placed to weather any Fed-related volatility.
The 50-share index rose 0.2% for the week, its sixth consecutive weekly gain. That was its longest winning run since a more powerful seven-week run between January and end-February 2012.
However, broader gains were limited as investors chose to pare positions in bets related to government’s efforts to rein in the country’s fiscal deficit, such as Oil and Natural Gas Corp after its recent outperformance.
“While the rally is justified on expectations of reforms, actual on-ground results might take some more time,” said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance. The broader NSE index rose 0.08% to 8,121.45.
The benchmark BSE index fell 0.08%, or 21.79 points, to end at 27,090.42, notching up a weekly gain of 0.11%.
Also, both indexes yesterday marked their highest intraday levels since September 9.
Exporters with huge cash reserves gained on hopes of being better bets amid any US Federal Reserve-related surprises.
Among IT exporters, Tata Consultancy Services rose 2.7%, while HCL Technologies and Tech Mahindra advanced 2.2% each.
In pharmaceuticals, Lupin rose 1.7% while Dr Reddy’s Laboratories gained 1%. Idea Cellular gained 3% after FTSE raised its profitability weighting in related indexes to 40% from 24%.
Indiabulls Power surged by its maximum daily limit of 5% after broker Motilal Oswal initiated coverage on the stock with a “buy” rating, citing capacity expansion and “compelling” valuations.
However, stocks that could be affected by government measures to mend the country’s finances fell. State Bank of India fell 2% while ONGC lost 2.4%.
Suzlon Energy slumped by its maximum daily limit of 10% after part of its foreign currency convertible bonds exchanged to shares on September 9 started to trade yesterday.
Meanwhile the rupee rose for a fourth consecutive session yesterday, boosted by strong foreign fund flows into markets, although the local currency fell against the dollar for the week, in line with losses in other emerging Asian currencies. Scotland’s decision to stay in the United Kingdom also eased investor concerns yesterday after a recent run of global political obstacles.
Although the rupee hit a one-month low on Monday, it has steadily risen since then on optimism that hefty foreign fund flows will better help it weather any volatility related to potential US Federal Reserve rate hikes.
Foreign funds bought $484.65mn of government bonds on Thursday, the highest since a record high of $2.65bn on August 21. “While some assets may be over-valued, there is still a lot of space to go long on India. I see the rupee strengthening from here in the lead up to the RBI’s policy review later this month,” said Surendran AV, head of treasury at Dhanlaxmi Bank in Mumbai.
The partially convertible rupee ended at 60.81/82 per dollar, compared to its close of 60.83/84 on Thursday.
Still, it was down 0.26% for the week on account of the big losses on Monday, posting a second consecutive weekly loss.
With few domestic factors next week, traders say foreign fund flows will determine the rupee’s direction ahead of the Reserve Bank of India’s policy review on Sept. 30. Foreign funds have bought debt and equity worth nearly $3.61bn so far in September, as per regulatory data, bringing their total for the year to $33.66bn.