Indian Stocks Swing Between Gains, Loss; Tata Steel Advances

Indian (SENSEX) stocks swung between gains and losses. Metal stocks climbed as automakers declined.

Tata Steel Ltd. (TATA), the country’s biggest producer of the alloy, jumped 5.7 percent, leading advances among peers after Nomura Holdings Inc. raised its outlook on metal producers to overweight from underweight, citing a weak rupee. Explorer Oil & Natural Gas Corp. (ONGC) rebounded from a nine-month low. Tractor producer Mahindra & Mahindra Ltd. (MM) dropped for the sixth day.

The S&P BSE Sensex gained 0.3 percent to 17,956.88 at 12:23 p.m. in Mumbai, after changing direction at least nine times. Volume was 57 percent higher than the 30-day average for this time of day. The measure slumped 7.6 percent in the past four days, the most since July 2009, amid concern government steps to steady the rupee may curb economic growth. The currency slid to a record 65.5050 per dollar after the Federal Reserve minutes showed the U.S. is getting closer to reducing stimulus.

“There could be a bit more pain as the currency is still in an unchartered territory,” Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services Ltd., said on Bloomberg TV India today.

The MSCI Asia Pacific Index dropped for a sixth day today after minutes of the Fed’s July meeting showed officials were “comfortable” with Chairman Ben S. Bernanke’s plans to start reducing the $85 billion monthly stimulus. Global funds have withdrawn $12.2 billion from local stocks and bonds since May 22, when Bernanke made his first comments about the possibility of the U.S. central bank curbing bond purchases. The rupee has depreciated 13 percent in the same period.

Tata, Sesa

Tata Steel rallied 14 rupees to 258.3 rupees, increasing this month’s gains to 22 percent. The stock slumped to its lowest close since March 2009 on Aug. 2. Sesa Goa Ltd. (SESA), Sterlite Industries (India) Ltd. (STLT) and Hindustan Zinc Ltd., controlled by billionaire Anil Agarwal, rose at least 2 percent.

Sterlite will be replaced with Sesa in the S&P BSE Sensex after its merger with the latter, the BSE said in a statement yesterday. Hindustan Zinc soared 5.5 percent to 114.2 rupees.

Improvements in the global economy and the falling rupee will boost earnings of Indian metal producers, Nomura analysts led by Prabhat Awasthi wrote in a note. The S&P BSE Metal index gained 3.1 percent, paring its year-to-date loss to 33 percent.

Oil & Natural Gas jumped 4 percent to 260.8 rupees, ending a four-day, 13 percent slide. India’s largest state-owned oil explorer will share Reliance Industries Ltd. (RIL)’s KG-D6 gas basin infrastructure, a move that will save it $700 million in expenditure, the Economic Times reported today.

Mahindra declined 2.2 percent to 767 rupees, taking its six-day fall to 12 percent. Carmaker Maruti Suzuki India Ltd. (MSIL) slumped 3.3 percent to 1,242.05 rupees.

An exodus of cash from India has left the rupee vulnerable to a current-account shortfall that widened to an unprecedented 4.8 percent of gross domestic product in the year ended March, official data show. Asia’s third-largest economy expanded at the slowest pace in a decade in the same year.

The slowdown and a weak rupee is hurting company earnings. Combined profits for the 30 companies in the Sensex increased 1.4 percent in the three months ended June compared with an estimate of 5.8 percent before the reporting season began, Bank of America Corp. analysts Jyotivardhan Jaipuria and Anand Kumar wrote in a report dated Aug. 19.

About 47 percent of Sensex companies that posted earnings for the June quarter missed analyst estimates. That compares with 27 percent for the March quarter, and 43 percent in the three months ended December, data compiled by Bloomberg show.

The Sensex has lost 8.2 percent this year and trades at 12.7 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.7 times.

The CNX Nifty (NIFTY) Index on the National Stock Exchange of India increased 0.2 percent to 5,310.35, rebounding from its lowest level since Sept. 6. India VIX, which gauges the cost of protection against losses in the Nifty, rose 5 percent, extending its four-day climb to 58 percent.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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