Indian equities rise to 2-month high as metal makers shine
January 11 2017 08:27 PM


Indian shares advanced, with the benchmark Sensex rising to a two-month high, as metal stocks rallied for a second day.
The gauge broke above its 200-day moving average for the first time in a month, helped by Coal India Ltd, the country’s largest producer, which rose 5.4%, the most since February 2016. The company may consider raising prices by 8% to 10% this month, television channel CNBC-TV18 reported, citing news agency Cogencis. Tata Steel Ltd extended a six-day rally to 11%, joining other Asian mills, after China was said to have closed eight projects in a top-producing province.
The Sensex is poised to rebound in January from a two-month decline. The past slump came as the nation’s decision to scrap existing high denomination currency bills on November 8 led to concerns about slower economic growth. The gauge retreated 0.1% last month, adding to a 4.6% drop in November. “The market is finding reasons to rally and metal stocks have just been providing that for the past few days,” said Deven Choksey, a managing director at Mumbai-based KR Choksey Shares & Securities Pvt. This can also be the beginning of a “pre-budget rally” as some investors look to build positions on likely announcements from the federal budget to be presented on February 1, he said.
The 10-member S&P BSE India Metal index climbed 4.4% to the highest since December 2014, after gaining 1.3% on Tuesday. The gauge surged 37% in 2016, the most among the 13 sector indexes compiled by BSE.
Earnings momentum for Indian metal producers will remain strong in 2017 with a “significant potential stock price upside” in some companies, even from current levels, Anuj Singla, an analyst at Deutsche Equities India Pvt, wrote in an investor note yesterday.
The last time the Sensex decisively cleared the 200-day average level was in May and it went on to rally about 13% to the 2016 high in September.

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