Indian stocks advanced to a 10-week high, with the benchmark gauge capping a third week of gain, as risk appetite returned to developing markets after global central banks indicated a willingness to continue measures to support growth and stabilise markets.
Tata Consultancy Services, the largest software exporter, surged to its highest price this year. Bharat Heavy Electricals, India’s biggest power-equipment maker, rose for a fifth day to become the best performer on the S&P BSE Sensex this week.
The stretch of gains was the longest since July. GAIL India climbed to a six-week high.
The Sensex surged 1.1% to 24,952.74, its highest close since January 6. The gauge rose 1% this week. Emerging-market stocks were on the cusp of a bull market as crude topped $40 a barrel and the Federal Reserve’s dovish stance revived demand for riskier assets. Global funds bought $1.9bn of local shares since March 1, the biggest inflow in 15 months.
“Foreign inflows into India have become even more correlated with those going to other large emerging-market nations and that’s why you need to look outside for cues,” Sanjay Mookim, an equity strategist at Bank of America Merrill Lynch, said in an interview with Bloomberg TV India. “We have seen a decent pick up in flows in this EM rally and after the annual budget. Hopefully, that will continue for a while.”
Indian stocks have climbed in all but three days this month after Finance Minister Arun Jaitley in his February 29 budget pledged to further cut the fiscal deficit, stoking speculation of an interest-rate cut by the central bank in its April 5 policy meeting.
Reserve Bank of India Governor Raghuram Rajan said over the weekend the central bank was “comforted” by the government’s plan to shrink the budget deficit to 3.5% of GDP while telling reporters to “wait and see” how that feeds into monetary policy.
The Sensex has rallied 8.5% in February, poised for its best monthly performance since October 2013. Global funds bought $140mn of shares on Thursday, taking the week’s inflow to $428mn.
“Our market is driven by liquidity, apart from our own fundamental strength,” Pankaj Razdan, chief executive officer of Birla Sun Life Insurance, said in an interview with Bloomberg TV India. “The market is very attractive for the next three to five years. You may see volatility, but money is always made in volatile markets.”
The India VIX Index, a measure of volatility, capped its third weekly loss, the longest run of declines since October. Tata Consultancy jumped 3.1% to its highest level since December. Bharat Heavy climbed 2.3%, taking this week’s rally to 9.4%. ICICI Bank, the nation’s largest private sector bank, added 1.1% to extend this week’s gain to 7.7%.
Bharti Airtel has risen 9% this month. GAIL gained 3.1%, extending rally. Meanwhile the rupee closed stronger against the US dollar for the third consecutive session against the US dollar, supported by expectations that foreign portfolio investors (FPI) would continue to buy domestic equities. The currency closed at 66.51, up 0.36%, from its previous close of 66.75.
The currency had opened at 66.62 per dollar and touched a high of 66.50, the level last seen on January 5. The rupee closed stronger for the third consecutive week and has gained 3.2% from February 26 till date.
Between March 1 and March 17, FPIs bought $1.91bn worth of shares due to which local stock indices gained 8.48%, or over 1,950 points.
India’s benchmark Sensex index rose 1.12%, or 275.37 points, to close at 24,952.74 points. However, the Sensex is down 4.45% since 1 January.
Since the beginning of this year, the rupee has lost 0.53%, while foreign institutional investors have sold $964.1mn from local equity and $1.17bn in debt markets.
Meanwhile, the bond yield fell for the seventh consecutive session on hopes of a rate cut by the Reserve Bank of India in its next monetary policy, scheduled for 5 April. The bond yield fell for the third consecutive week and is down 26 basis points since 27 February till date.
India’s 10-year bond yield closed at 7.52%—a level last seen on 5 October 2015, as compared with its Thursday’s close of 7.522%.
Asian currencies closed lower. Singapore dollar was down 0.42%, Indonesian rupiah 0.32%, China offshore spot 0.22%, Thai baht 0.15%, Philippines peso 0.06%.
However, South Korean won was up 1%, Taiwan dollar 0.67% and Malaysian ringgit 0.07%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.957, up 0.21% from its previous close of 94.76.
The Bombay Stock Exchange building is seen in Mumbai. The Sensex closed up 1.1% to 24,952.74 points yesterday, its highest close since January 6.