Indian stocks advanced, with the benchmark gauge erasing losses in the last hour of trade, as engineering companies and automakers climbed.
Bharat Heavy Electricals, the nation’s biggest power- equipment maker, was the best performer on the S&P BSE Sensex. Larsen & Toubro rose for a fifth day, the longest run in five months. Mahindra & Mahindra, the largest sports utility-vehicle maker, and Hero MotoCorp increased more than 2% each.
The Sensex added 0.2% at the close in Mumbai, reversing an intraday drop of 0.8%. Global funds have bought $2.4bn of shares since March 1, putting the index on course for its best month since January 2012, after Finance Minister Arun Jaitley in his February 29 budget pledged to further cut the fiscal deficit and boost rural spending.
“Foreigners have been on a buying spree since the budget day and every small, intra-day fall is being bought into,” Kaushik Dani, a fund manager at Karvy Stock Broking in Mumbai, said by phone. “There’s a lot of strength in the market.”
The Sensex on Monday climbed above its 100-day moving average for the first time since October as speculation mounted that the Reserve Bank of India will lower borrowing costs after the government cut interest rates on small savings plans. The monetary authority will review its policy rates on April 5. “A 25-basis point cut has been factored in; traders are speculating if the RBI will lower borrowing costs by 50 basis points,” said Dani. “That’s leading to buying in financials, capital goods and auto segments.”
Bharat Heavy Electricals rallied 4.2% to take this month’s jump to 28.5%, the most on the Sensex. It lost 36% of its value last month. Tata Steel, the biggest producer of the alloy, climbed to a 10-month high. The stock has rallied 24% since March 1, heading for its best month since August 2013.
Mahindra & Mahindra, India’s largest maker of sport-utility vehicles and tractors gained, 2.1% in a third day of advance. Hero MotoCorp, the biggest maker of motorcycles, rose 2.2% to its highest level since January 15, 2015. Bosch, a manufacturer of automotive parts, surged to its highest level since November 5.
Reliance Industries, owner of the world’s largest refining complex, capped its biggest winning run in six years after its stock-target price was increased 17% at Sanford C. Bernstein & Co. The shares rose 1% in an eighth day of gain, the longest period since March 2010.
Meanwhile the rupee yesterday closed weaker against the US dollar as a wider-than-expected current account deficit (CAD) for October-December quarter triggered worries over the country’s external position.
The currency closed at 66.72, down 0.21% from its previous close of 66.54. The rupee opened at 66.59 per US dollar and touched a high and a low of 66.52 and 66.84, respectively. The CAD was at $7.1bn for the December quarter, wider than the median $3bn estimated in a Bloomberg survey.
Traders were also cautious and avoiding long positions ahead of a shortened week. Indian markets are closed on March 24 on account of Holi. Markets across the world will be shut on March 25 for Good Friday.
Mixed Asian currencies also weighed on sentiment. Indonesian rupiah was down 0.243%, Taiwan dollar 0.142%, Singapore dollar 0.073% and China offshore spot was down 0.122%. However, Malaysian ringgit was up 1.225%, South Korean won 0.807% and Japanese yen 0.125%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.612, up 0.34% from its previous close of 95.288.
Since the beginning of this year, the rupee has lost 0.87%, while FIIs have sold $680.7mn from local equity and $1.15bn in debt markets.
Most public sector banks have given a notice for a one-day strike next week, opposing IDBI Bank’s privatisation, and banking operations could be affected. Banks would be shut for public transactions on 1 April due to the annual closure of accounts.
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