Sensex climbs on auto, metal firms

Indian shares rose for the first time in three days, led by metal producers and auto companies, sending the benchmark Sensex close to its 200-day moving average.Adani Ports & Special Economic Zone rose 3.2%, the most on Sensex, after it said earlier yesterday that it will issue US dollar bonds. Tata Motors also gained 3.2%, a day after reporting that December sales at unit Jaguar Land Rover climbed 12% from a year earlier.The rally yesterday extended to small- and mid-cap shares as local funds have cancelled out a sustained selling of Indian shares by overseas investors in the past few months. The S&P BSE MidCap index closed at a one-month high and the S&P BSE SmallCap index rose to the highest in two months. The last time the Sensex decisively cleared the 200-day average level was in May 2016 and it went on to rally about 12% over the next four months.“Indian equities will continue to be range-bound at least till the federal budget from where the investors expect to take some cues for the rest of the year,” said Deepak Jasani, head of retail research at Mumbai-based HDFC Securities. The equities will give double-digit returns in 2017 and “resource shares” will have another good year, he said.The S&P BSE Metal Index, a gauge of 10 producers, rallied 1.3% to highest in about a month. It surged 37% in 2016, the steepest gain among the 13 sector gauges compiled by BSE. The S&P BSE Oil & Gas index followed with a 27% jump.Metal producers and oil and gas explorers will gain from the expected revival in demand for resources from the US and China, HDFC Securities’ Jasani said.Foreign investors have sold $286mn of local shares in January so far, following a total outflow of $3.9bn in the past two months. That compares with local funds’ Rs17.2bn ($252mn) of share purchases so far in January after a total investment of nearly Rs230bn in the past two months.