Bloomberg/Mumbai
A late surge in Indian lenders and industrials helped the benchmark stock index reverse an intraday loss and end higher for a third straight week.
State Bank of India, HDFC Bank and ICICI Bank were among the best performers on the S&P BSE Sensex, while Larsen & Toubro, the largest engineering company, rose to a one-month high. Maruti Suzuki India and Tata Motors advanced for a second day. Reliance Industries, the owner of the world’s largest refining complex, rose for a fifth day before its results.
The Sensex rose 0.8% to 27,214.60 at the close, after a rally in lenders in the final 90 minutes of the session helped the gauge cap a third week of gains, the longest winning streak since July 5. Banks climbed as some traders closed bearish bets after a three-day slide in the CNX Bank Nifty index earlier this week, according to Deven Choksey, managing director at KR Choksey Shares & Securities in Mumbai. The premium on futures tied to the banking gauge almost doubled to 89.2 rupees from Thursday.
“Banks have significant weighting on the benchmark index,” Choksey said by phone.
Indian stocks have risen with global equities as weak economic data from China, Europe and the US boosted speculation central banks will maintain stimulus measures. Global funds bought $410mn of domestic shares so far this month, after pulling a combined $3.5bn in August and September.
“The global sentiment has turned positive on bets that the Fed won’t raise rates anytime soon,” said Shishir Bajpai, a director at Mumbai-based IIFL Wealth Management, which has $12bn under management and advisory. “India benefits from the risk-on trade.”
State Bank climbed 2.4%, HDFC Bank added 1.5% and ICICI Bank rose 1.3%. Larsen increased 2.9%, the best performer on the Sensex. Maruti closed at the highest level since October 1, while Tata Motors rallied to more than a two-month high.
Reliance added 0.9%, taking the week’s gain to 2.8%. Second-quarter profit climbed 14% to Rs65.6bn ($1bn), the Mumbai-based company said after market hours. Earnings beat the Rs58.8bn mean of 12 analyst estimates compiled by Bloomberg.
Nestle India rallied the most in more than two months after the company said it will resume sale of its Maggi noodles following laboratory tests that showed its products contained lead below approved limits.
International investors bought a net $62mn of Indian stocks on October 15, taking this year’s inflow to $4.2bn.
The Sensex has fallen 1% this year and trades at 15.8 times projected 12-month profits. The MSCI Emerging Markets Index is valued at a multiple of 11.1.
Meanwhile the in the spot market, the rupee fell 0.1% from Oct. 9 and was little changed yesterday at 64.8150 a dollar, paring its gain this month to 1%. It rallied 1.4% in September, the best performance among 24 emerging-market currencies tracked by Bloomberg.
A gauge of expected swings in India’s rupee retreated to a two-month low and posted a fifth weekly decline as foreign investors snapped up the nation’s assets.
Overseas holdings of rupee-denominated debt increased Rs131.1bn ($2bn) in the last four days, the biggest weekly increase since August 2014. That’s after India granted global funds greater access to sovereign bonds and allowed them to buy notes issued by state governments for the first time. Foreigners have also bought a net $122.8mn of local shares this week through Wednesday, the latest exchange data show.
The rupee’s one-month implied volatility, used to price options, dropped 24 basis points this week and six basis points yesterday to 6.44% in Mumbai, data compiled by Bloomberg show. “There doesn’t appear to be any near-term risk of sharp rupee weakness,” said R K Gurumurthy, Mumbai-based treasurer at Lakshmi Vilas Bank. Optimism around local assets is stemming from India’s relatively low exposure to China’s economic slowdown, a drop in oil costs that has improved the finances of Asia’s third-largest economy and increasing odds that the Federal Reserve won’t raise interest rates this year. India’s trade gap narrowed to $10.5bn in September, data showed Thursday.
