Indian stocks climbed for the first time this week, tracking European shares that advanced before the Group of 20 leaders discuss the region’s debt crisis at a summit later today.
Reliance Industries Ltd. (RIL), India’s most valuable company, rallied 1.6 percent. Bharat Heavy Electricals Ltd. (BHEL), the biggest power-equipment maker, gained the most since February. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, slid 1.8 percent.
The BSE India Sensitive Index, or Sensex, rose 0.1 percent to 17,481.93 at the 3:30 p.m. close in Mumbai, rebounding from an intraday loss of 1.1 percent. The Stoxx Europe 600 Index climbed 1 percent to 239.59, after earlier falling as much as 1.5 percent. The Stoxx 600 has still lost 4 percent so far this week as Greece called a referendum on the latest bailout package, spurring concern that a rejection of the measures may push the country into default.
“We saw a late rally on expectation of some positive announcement from the G-20 summit,” said Sunil Pachisia, vice president at Pratibhuti Viniyog Ltd. in Mumbai. “The Greece vote is expected to ratify some of the austerity measures proposed by the European nations. Some clarity on Greece will be a positive for domestic market sentiments.”
Today’s summit of leaders from the Group of 20 economies opens at Cannes, France, with a discussion on Greece and the euro area later today after the leaders of France, Germany, Italy and Spain hold another round of talks earlier.
India’s Prime Minister Manmohan Singh said yesterday the sovereign-debt crisis in Europe has emerged as the “principal source of concern” for the global economy and much more needs to be done to restore confidence in markets.
The Sensex has slumped 15 percent this year on concern the Reserve Bank of India’s record interest-rate increases may compound the effects of the European crisis and a slowing U.S. economy on corporate profits. Companies in the gauge trade at 14.9 times estimated earnings, down from 21.5 times in March 2010. The MSCI Emerging Markets Index is valued at 10.3 times.
“Markets are at the crossroads; no one is sure which way things are going to turn in Europe,” said R.K. Gupta, managing director of Taurus Asset Management Ltd., which manages $1.1 billion in assets. “A global slowdown and local concerns of inflation and interest rates provide a perfect backdrop for investors to remain cautious.”
The S&P CNX Nifty Index on National Stock Exchange of India Ltd. added 0.1 percent to 5,265.75. The BSE 200 Index increased 0.2 percent to 2,136.77.
Reliance climbed 1.6 percent to 885.9 rupees, paring this year’s slide to 16 percent. Bharat Heavy jumped 4.3 percent to 329.2 rupees, its steepest rally since February 14.
Infosys Ltd. fell for the third day, losing 1.1 percent to 2,802.1 rupees. India’s biggest software makers get about three quarters of their revenue from overseas.
Tata Motors dropped 1.8 percent to 188.7 rupees, extending this week’s fall to 8.8 percent. The company last year got 35 percent of its revenue from the U.S. and Europe.
Five out of 16, or 31 percent, of Sensex companies that reported results for the September quarter have lagged behind analyst forecasts, down from 47 percent in the three months ended June, Bloomberg data show.
“Quarterly numbers have not been extremely damaging or extremely surprising,” said Nikhil Vora, managing director and co-head of research at Mumbai-based IDFC Securities Ltd. in an interview to Bloomberg UTV today. “Earnings expectations have been grounded significantly and that is the best situation to be in, in any market condition.”
The Reserve Bank last week signaled it is nearing the end of its most aggressive credit-tightening after it lifted rates for the 13th time since March 2010 to contain prices that are rising the fastest among the BRICS nations. The central bank may not be done raising borrowing costs for the year to March 31, Deepak Parekh, chairman of Housing Development Finance Corp., the biggest mortgage lender, said yesterday.
“We don’t think inflation is going to come down in a hurry; it will be a recurring theme for the next few years,” Satish Ramanathan, director and head of equities at Sundaram Mutual Fund, said in a phone interview from Chennai yesterday. “We are better off buying defensives than infrastructure and growth companies,” he said, declining to name stocks.
India’s benchmark inflation has stayed above 9 percent since the start of December. Food prices jumped 12.21 percent in the week ended Oct. 22, the trade ministry said today. By comparison, consumer prices rose 7.3 percent in Brazil in September, 6.1 percent in China and 7.2 percent in Russia.
India’s wholesale price data for October will be released Nov. 14, three days after factory output figures for September are announced released.
Overseas investors bought a net 4.81 billion rupees ($98 million) of local shares on Oct. 31, raising total investment in stocks this year to 18.7 billion rupees, according to data on the website of the market regulator. They withdrew a net $2.4 billion in August, the most since October 2008.
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