Indian bystanders watch share prices displayed on a digital broadcast on the facade of the Bombay Stock Exchange building in Mumbai. The Sensex jumped 0.6% to 25,760.1 points yesterday.
Indian stocks rose, with healthcare companies and industrials helping the benchmark index recoup from a two-month low, overcoming losses in regional equities after the terror attacks in Paris.
GAIL India, the largest natural-gas supplier, jumped the most in two months after its unit Mahanagar Gas filed papers with the market regulator to sell shares in an IPO. Dr Reddy’s Laboratories had the steepest gain since September after slumping 21% in the past two weeks, while rivals Lupin and Cipla added at least 1.2%. Tata Steel and Hindalco Industries, the nation’s top aluminum producer, were among the best performers on the S&P BSE Sensex.
The Sensex jumped 0.6% to 25,760.1 at close in Mumbai, reversing an intraday loss of 0.6%. The gauge completed its third weekly loss on Friday after Prime Minister Narendra Modi’s Bharatiya Janata Party lost a state election, stoking concern that he will struggle to push through policies in the parliament. The declines dragged the gauge’s 14-day relative strength index to near a two-month low, signalling a possible rebound.
“The market rebounded from an oversold territory as investors used the panic to add to their portfolios,” Jitendra Panda, chief executive officer at Peerless Securities, said by phone from Kolkata. “There’s speculation that moderating inflation will enable the Reserve Bank of India to lower rates next quarter.”
India’s wholesale prices fell for a 12th straight month even while he pace of deflation eased. Consumer prices - the central bank’s benchmark - rose 5% last month from a year earlier after a 4.41% climb in September. RBI Governor Raghuram Rajan has said he can reach his 5% CPI target for March 2017 with the current monetary stance. He reviews rates again on December 1, having cut four times this year.
“We expect more than 200 basis points of rate cuts in 2015-2016,” Christopher Wood, chief equity strategist at CLSA Asia Pacific Markets, told reporters in Gurgaon, near New Delhi on Monday. “While earnings growth continues to be downgraded, the offsetting positive is the significant rate cuts.” The brokerage remains “overweight” on Indian equities because the country benefits more than its regional peers from lower oil and commodity prices, he said.
Fifty-seven% of Sensex members that have posted September quarter results have matched or beaten estimates, versus 60% in June.
GAIL India jumped 4.5%, the most since September 8. GAIL and BG Asia Pacific Holdings. each hold 49.75% of Mahanagar Gas, which supplies homes and industrial users in Mumbai. The two founders plan to sell a combined 24.7mn shares, according to the draft offer filed with the regulator.
“The Mahanagar Gas IPO and the expected pipeline tariff hike are the likely triggers for GAIL,” Dhaval Joshi, an analyst at Emkay Global Financial Services, said by phone from Mumbai. “There’s limited downside for the stock after recent sharp correction.” The stock touched a two-month low on November 10.
ICICI Bank Ltd and State Bank of India, the nation’s largest by assets, advanced at least 2.1%, while ITC Ltd, the top tobacco company, gained the most in three weeks.
International investors sold a net $127mn of Indian stocks on November 13, reducing this year’s inflows to $4.1bn. The Sensex has fallen 6.3% this year and trades at 15.1 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.
Meanwhile the rupee rose for a third day. It strengthened 0.2% to 65.9950 against the dollar, tracking gains in stocks, prices from local banks compiled by Bloomberg show. It earlier fell to as low as 66.26, in line with other major Asian currencies after the Paris terror attacks prompted investors to seek safer assets.
A gauge of expected swings in India’s sovereign bonds was near a one-month high on speculation quickening inflation will challenge central bank Governor Raghuram Rajan’s accommodative monetary policy stance.
A measure of ten-day historical volatility for the notes due May 2025 was at 2.94% yesterday, close to Friday’s 2.96%, which was the highest since October 13, according to data compiled by Bloomberg. The yield on the securities was little changed at 7.65% in Mumbai, prices from the central bank’s trading system show.
Consumer prices - the central bank’s benchmark - rose 5% in October from a year earlier after a 4.41% increase in September, according to government data last week. Wholesale prices showed an easing pace of deflation with the index shrinking 3.81% in October, after a 4.54% contraction a month earlier, the Commerce Ministry said in a statement on Monday. Rajan has reduced rates four times so far this year and will next review his policy on December 1.
“Higher food prices are adding to the uptick in consumer price inflation,” said Soumyajit Niyogi, an interest-rate strategist at SBI DFHI in Mumbai.
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