India’s benchmark stock index climbed to a six-week high as energy companies and metal producers gained amid advances in Asian equities and crude oil prices.
Vedanta, the largest copper producer, climbed the most in a month, while Hindalco Industries, the second-biggest aluminum maker, rallied the most in two years. Tata Steel, the biggest producer of the alloy, advanced for a third day. Oil & Natural Gas Corp capped its longest stretch of gains in 18 months after saying exploration costs may decline 20% this fiscal year. Reliance Industries, owner of the world’s largest refining complex, completed the biggest six-day advance in more than three months.
The S&P BSE Sensex gained 0.4% to 27,035.85 at the close in Mumbai yesterday, the longest stretch of advances since June 23. Global stocks have gained in the days after their worst quarter since 2011 amid speculation that weak economic data will convince the Federal Reserve to hold off on raising interest rates while anemic global growth puts pressure on central banks elsewhere to boost stimulus. Foreigners bought a net $123mn of Indian stocks on Monday in a third day of purchases, taking the year’s inflow to $3.7bn, the most among eight Asian markets tracked by Bloomberg.
“Most of the correction in the Indian market last month was because of the global issues and a large part of that is done,” Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co, which manages $6.8bn, said in an interview with Bloomberg TV India yesterday. “The stimulus provided by the RBI last week will percolate down to the capital expenditure spending and that will be the key driver of the markets.”
The Sensex tumbled 5. 9% in the three months ended September, the worst quarter in four years. Even so, the gauge has risen 4.9% since September 29 when the Reserve Bank of India cut its interest rate by more than economists’ had forecast. Governor Raghuram Rajan had left the repurchase rate unchanged in August, resisting government pressure to lower one of Asia’s highest borrowing costs as consumer prices slow.
Hindalco surged 9.2%, the most since August 2013. Vedanta rallied 5.9%, paring this year’s loss to 58%. Tata Steel gained 4.1% to its highest level since September 14.
Oil & Natural Gas rose 4.2% in a sixth day of advance, the longest stretch since March 2014. GAIL India, the largest natural-gas supplier, climbed to its highest level since August 20. Oil India increased 2.4%, paring this year’s loss to 21%. Reliance Industries added 1.8%, a sixth day of advance. Tata Motors, owner of Jaguar Land Rover, added 2.3%, extending this week’s advance to 15%. Motorcycle maker Bajaj Auto increased 3.2%.
Indian Hotels Co jumped 3.2%, with volumes 19 times the three-month daily average and the highest level in at least five years.
The Sensex has fallen 1.7% this year and trades at 15.7 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.3. Earnings reporting season for the quarter ended September begins on October 12, when Infosys announces results.
Meanwhile the rupee strengthened 0.7% to 64.9650 a dollar, advancing for the sixth time in seven days.
A gauge of expected swings in India’s rupee slipped to a two-month low amid optimism demand for the nation’s assets is picking up as sentiment toward emerging markets improves.
Foreigners bought$221.3mn more Indian shares than they sold in the first three trading days of this month, after pulling $3.46bn from the market in August and September.
Holdings of rupee-denominated debt have risen Rs3.54bn ($54.5mn) in October. Developing-nation stocks and Asian currencies climbed on Wednesday as traders bet the Federal Reserve will hold off raising interest rates this year. India’s central bank on September 29 cut borrowing costs by more than economists estimated and allowed global funds greater access to local sovereign notes.
The rupee’s one-month implied volatility, used to price options, fell two basis points in a sixth day of declines to 6.60% in Mumbai, data compiled by Bloomberg show. It fell to 6.50% earlier, the lowest since August 12. “Fresh dollar inflows have increased,” said Rohan Lasrado, Mumbai-based head of foreign-exchange trading at RBL Bank. “The environment has changed since the Reserve Bank of India policy and we expect more money to come in.”
The rupee has been Asia’s best-performing currency since the end of August. ABN Amro Bank, the top forecaster in Bloomberg’s quarterly rankings, sees the currency maintaining that position on the back of higher inflows.
India will raise the ceiling on foreign ownership of its sovereign bonds to Rs1.67tn effective October 12, from Rs1.54tn, the RBI said in a statement on Tuesday. It unveiled a plan last week to increase the cap in phases to 5% of the total amount outstanding by March 2018, from about 3.8%.
The yield on government notes due May 2025 rose one basis point to 7.54% in Mumbai on Wednesday, prices from the RBI’s trading system show. It closed at 7.51% on October 5, the lowest for a benchmark 10-year security since July 2013, according to data compiled by Bloomberg.
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