Sensex climbs most in Asia as refiners gain on Iran deal

 Bloomberg

Mumbai

Indian stocks advanced the most in Asia amid speculation falling oil prices will cool inflation after Iran agreed to limit its nuclear programme in exchange for relief from some sanctions.

Hindustan Petroleum Corp, a state-run refiner, and Oil & Natural Gas Corp, the largest state explorer, had the biggest rally in more than two months. Axis Bank ended a four-day loss on a plan to add the lender to the S&P BSE Sensex. Bharat Heavy Electricals was the best performer on the Sensex.

The Sensex jumped 1.9% to 20,605.08 at the close. Wholesale prices in India, which imports about 80% of its oil, climbed 7% in October, the fastest pace since February, data showed this month. The lifting of a European Union ban on insuring tankers carrying Iranian crude as part of a nuclear deal will ease the process of buying the Gulf state’s oil, according to Indian refiners. Brent crude headed for the biggest drop in three weeks.

“The Iran deal impacts the oil market as well as India’s economy and that improved sentiments here,” Dipan Mehta, a member of the BSE, said on Bloomberg TV India yesterday.

The Reserve Bank of India raised its key interest rate on October 29, the second straight increase, to fight inflation. The authority is due to review monetary policy on December 18.

Hindustan Petroleum soared 5.7%, the biggest gain since September 6. Indian Oil Corp, the nation’s biggest state refiner, climbed 2.6% to Rs205.85. Bharat Petroleum Corp surged the most since September 27. Oil & Natural Gas gained 3.7%, the biggest increase since September 19.

Reliance Industries, the owner of the world’s largest refining complex, added 0.9%, ending a three-day fall.

Axis Bank increased 3.1%, ending a four-day, 5.1% drop. The stock will be added to the Sensex from December 23. ICICI Bank jumped 5.3%. The 13-member S&P BSE Bankex surged the most since October 29 after declining 6.7% in the three weeks ended November 22.

“Banks stocks saw some short-covering ahead of the expiry this week,” Siddarth Bhamre, an analyst at Angel Broking, said by telephone from Mumbai. Indian derivatives expire on the last Thursday of every month.

Power-equipment maker Bharat Heavy soared 5.2%, the most in two months, while engineering company Larsen & Toubro added 4% to Rs1,002.65.

The Sensex has gained 6.1% this year, the largest increase among the four biggest emerging markets, and trades at 13.5 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.6 times.

Global investors bought a net $2.7mn of local shares on November 22, taking this year’s inflows to $17.2bn, according to data from the market regulator.

The CNX Nifty Index increased 2% to 6,115.35. The India VIX gained 5%.

Meanwhile, India’s rupee rose the most among its regional peers on optimism a drop in oil costs after Iran agreed to curb its nuclear programme will help shrink the South Asian nation’s current-account deficit.

Brent crude fell 1.7% after Iran agreed yesterday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, the first major crack in a decade-long deadlock.

The RBI on November 22 conditionally extended the deadline for banks to swap dollars raised through overseas borrowings at discounted rates, further bolstering the local currency.

“The Iran deal is a huge boost as our oil costs will come down,” said Vikas Babu, a trader at Andhra Bank in Mumbai. “The swap-window extension will have a limited, but positive impact on the exchange rate.”

The rupee gained 0.6% to 62.495 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It touched 62.4375 earlier, the strongest level since November 20. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, was little changed at 11.60%.

India imports about 80% of its oil and refiners are the biggest purchasers of foreign currency in the nation. The shortfall in the broadest measure of trade will narrow to $56bn in the year through March 2014 from a record of $88bn in the previous 12 months, RBI Governor Raghuram Rajan predicted last month.

Indian banks now have until December 31 to avail themselves of the central bank’s offer of concessional swaps for dollars raised through overseas debt, compared with the previous deadline of November 30, as long as the funds have been committed by the end of this month, the RBI said in a statement after market hours on November 22. Three-month offshore non-deliverable rupee forwards rose 0.3% to 64.04 per dollar, according to data compiled by Bloomberg.

Asian shares mostly higher; oil weakens

Asian markets mostly rose yesterday following another record close on Wall Street, while oil prices fell after Iran struck a deal on its nuclear programme that will see eased sanctions on the oil producer.

The generally positive sentiment sent the yen sinking against the dollar, while it also hit a four-year low versus the euro.

Tokyo jumped 1.54%, or 237.41 points, to 15,619.13, its highest close since May 22. Sydney gained 0.32%, or 16.9 points, to 5,352.8 and Seoul added 0.49%, or 9.75 points, to close at 2,015.98.

However, Hong Kong ended virtually flat, edging down 11.83 points at 23,684.45 while Shanghai lost 0.47%, or 10.26 points, to end at 2,186.12.

Traders took their cue from New York, where the S&P 500 ended above the psychologically important 1,800 level for the first time on Friday. The Dow also closed at another record high, a day after it broke the key 16,000 level.

On oil markets Brent prices tumbled more than 2% after Iran on Sunday agreed to curb its nuclear programme for the next six months in exchange for limited sanctions relief.

Brent North Sea crude for January delivery fell $2.33 or 2.10% to $108.72. New York’s main contract, West Texas Intermediate for January, was down $1.37, or 1.45%, at $93.47.

“Brent had rallied last week in response to market talk that the negotiations weren’t going so well, and what we see right now is a downward correction of prices after the deal,” Victor Shum, managing director at IHS Purvin and Gertz in Singapore, told AFP.

However, he added that despite the falls yesterday the impact of the deal on global supplies would be limited since many of the sanctions on Iran would remain in place for now.

The yen came under further selling pressure yesterday as investor confidence in the global outlook improved. Traders generally move into the yen in times of economic uncertainty as it is considered a safe bet.

In afternoon trade, the dollar was changing hands at ¥101.78 compared with ¥101.23 in New York on Friday. The greenback last week topped ¥101 for the first time since July.

The euro was sitting around a four-year high at ¥137.80 compared with ¥137.21 in New York, while also fetching $1.3537 against $1.3555.

Gold fetched $1,231.50 per ounce at 1025 GMT compared with $1,242.80 on Friday.  

In other markets, Bangkok slipped 0.46%, or 6.21 points, to close at 1,352.86; Jakarta closed higher 0.39%, or 16.84 points, at 4,334.80; Singapore closed up 0.25%, or 7.80 points, at 3,180.65; Kuala Lumpur’s main index gained 0.19%, or 3.45 points, to close at 1,797.97; Taipei rose 0.87%, or 70.73 points, to 8,187.51; Wellington closed flat, edging down 4.12 points to 4,813.88; and Manila slipped 1.32%, or 80.58 points, to 6,004.26.