Indian stocks gained for a second day in a volatile trade with opinion polls showing Hillary Clinton ahead of Donald Trump as Americans prepare to vote in the presidential election.
Industrial companies and banks countered declines in drugmakers, with the gains helping the benchmark index close in the green after changing direction at least 12 times.
Tata Motors was the top performer on the S&P BSE Sensex after Credit Suisse Group wrote the owner of Jaguar Land Rover stands to gain from a weak British pound. ICICI Bank reached a two-week high after reporting profit that surpassed estimates. Better-than-estimated earnings pushed Bharat Heavy Electricals, a maker of boilers and turbines, to a five-week high.
A Bloomberg Politics national poll put Clinton ahead of Donald Trump by three percentage points, boosting investors’ confidence in risk assets globally. The poll was conducted before an FBI statement saying her handling of e-mails wasn’t a crime. Global equities slumped last week and haven assets rallied after the FBI said on October 28 that it had reopened a probe into Clinton’s communications, potentially damaging her election chances.
“The election is a close call but the market loves Hillary; it’s a big event,” said Vijay Chopra, managing director of New Delhi-based Enoch Ventures. “Some investors who had gone excessively short are hedging their positions to ensure they don’t lose on the one side in case there’s any wild moves.”
Indian stocks could rally about 5% if Clinton wins and decline by as much if Trump becomes President, Chopra said.
Domestic investors are also looking at company earnings for signs of economic expansion filtering through to company bottom lines. So far, 21 of the 32 Nifty companies that have reported results have beaten estimates, data compiled by Bloomberg show. Foreigners have bought $7mn of Indian stocks this month, after pulling $746mn in October that was the first selloff in eight months. Local mutual funds have bought shares worth $251mn, extending October’s net purchases of $1.2bn, data compiled by Bloomberg show.
The Sensex has climbed 5.6% this year and trades at 16.4 times projected 12-month earnings, compared with a five- year average of 14.4 times. ICICI Bank rose to a two-week high. The lender’s net income exceeded estimates after the listing of its life-insurance unit - India’s biggest initial public offering in six years - helped the bank offset higher bad-loan provisions in the September quarter and post a record profit. Varun Beverages, a PepsiCo franchise, rose 3.3% in its trading debut. Mindtree rose the most since August 1 after 2.18% of its shares changed hands. Names of the buyers and sellers were not immediately known. New Delhi Television added 1.6% after the government put on hold its one-day broadcast ban.
Sun Pharmaceutical Industries, India’s most valuable drugmaker, lost 3%, while Cipla decreased 1.9%. A gauge of health-care companies dropped 1.2%, extending last week’s 8% tumble, on concern a win by Clinton may pave the way for tighter pricing rules for Indian drugmakers, Kotak Institutional Equities said in a report dated November 7.
Meanwhile the rupee yesterday closed at a one month high against the US dollar, after local equity markets gained over 130 points ahead of the US presidential election.
The rupee closed at 66.62 a dollar—a level last seen on 10 October—up 0.17% from its previous close of 66.74. The home currency opened at 66.72 and touched a high of 66.61 against the US dollar. So far this year, it has fallen 0.87%.
Bond yield fell for the second session and closed at a week’s high after a record state debt sale was fully sold.
The benchmark 10-year government bond yield closed at 6.798%, a level last seen on 28 October, compared with Monday’s close of 6.835%. Bond yields and prices move in opposite directions.
