Bloomberg/Mumbai
Indian equities ended four weeks of losses in volatile trade as investors awaited monthly factory production data and concerns eased that China’s financial-market turmoil will derail global growth.
State Bank of India and Bank of Baroda rose more than 1% each. Wipro and Infosys added at least 1%, leading software companies higher. Vedanta lost 2.8%. Bharat Heavy Electricals, India’s biggest power-equipment maker, declined for the first time four days. Tata Motors and Tata Steel were the top performers on the S&P BSE Sensex this week.
The Sensex declined less than 0.1% to 25,610.21 at the close after swinging between a gain of 1% and a loss of 0.4%.
The gauge climbed climbed 1.6% this week, ending its longest stretch of weekly losses since October, before the Federal Reserve’s interest-rate decision next week. “Large macro factors are in India’s favour, with the drop in commodity prices and inflation, and we’re still in positive territory in terms of outlook for the economy,” Taher Badshah, co-head of equities at Motilal Oswal Asset Management Co, which has $413mn in assets, said in an interview with Bloomberg TV India yesterday. “Foreign selling has also abated a bit and we remain supported by local inflows.”
Withdrawals by overseas investors have fallen to an average $93mn a day so far this week, from last week’s mean of $127mn, data compiled by Bloomberg show.
They withdrew $2.6bn in August, the worst outflow since October 2008. Local funds have bought a net $87mn of shares so far this month, extending last month’s purchases of $2.4bn, the data show.
Hong Kong’s gauge of Chinese stocks gained 6% this week, the most since April 10.
The Shanghai Composite Index advanced 1.3% this week amid reassurance from Premier Li Keqiang that authorities have sufficient tools to prop up the economy should growth fall below their desired level. State Bank gained 1.2%. Bank of Baroda rose 1.3%. Housing Development Finance Corp, the largest mortgage lender, added 1.2%. Wipro gained 1.3% and Infosys advanced 1% to a one-week high.
Vedanta lost 2.8%, taking this year’s loss to 55%. Tata Steel tumbled 3%, paring this week’s gains to 6.4%. Bharat Heavy Electricals fell 2.9%. Tata Motors slid 2.7%, paring this week’s advance to 6.7%, the most on the Sensex.
The Sensex trades at 14.6 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index. The CNX Nifty Index was little changed at 7,789.30.
Meanwhile the rupee fell 0.1% this past week and 0.2% yesterday to 66.54 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The currency retreated for the fifth straight week.
India’s 10-year sovereign bonds dropped in the week as overseas investors pulled the most money from the country’s debt in three months before the Federal Reserve reviews US interest rates.
Foreign holdings of the notes fell Rs23.2bn ($350mn) in the first four days of the week, according to data from National Securities Depository.
The yield on the bonds due May 2025 rose two basis points from September 4 to 7.77% in Mumbai, according to prices from the central bank’s trading system.
That’s the biggest weekly increase since August 21. The yield was steady yesterday.
Rajan has lowered the repurchase rate by 75 basis points this year to 7.25%, with the latest move in June.
Investors are waiting to see how the Indian central bank will react to data due in the next week, Bagri said. Consumer- price growth is likely to have slowed to 3.58% in August from 3.78% in July, according to a Bloomberg survey before figures due September 14.
Industrial production unexpectedly jumped 4.2% in July, compared with 3.8% in June, data showed. Analysts had expected a slowdown to 3.6%.
