Indian stocks climbed for the first time in nine days as some investors judged the longest stretch of declines in 15 months as excessive.
The BSE India Sensitive Index, or Sensex, rose 0.5 percent to 19,561.04 at the close, with volumes 19 percent below the 30-day average. Oil & Natural Gas Corp., India’s biggest energy explorer, ended a seven-day drop after earnings beat estimates. Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, and Bharti Airtel Ltd., the largest mobile-phone operator, climbed about 2 percent each.
The Sensex slid for eight straight days through yesterday, the longest run since November 2011, as the statistics office last week said economic growth in the year ending March would be the weakest in a decade and third-quarter earnings from some of the nation’s biggest companies missed estimates. Industrial output unexpectedly decreased in December for a second month as demand faltered, government data showed today.
“It’s a dead cat bounce,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kochi in southern India. “The market was in an oversold region. There’s not much to cheer about. Industrial production numbers have disappointed.”
Prime Minister Manmohan Singh has stepped up efforts to spur the economy since mid-September, opening industries such as retail and aviation to more foreign investment, setting up a panel to speed up infrastructure projects and relaxed caps on capital inflows. Still, the nation’s elevated inflation of more than 7 percent has limited the extent its central bank can cut interest rates to boost demand, while an uneven global recovery has depressed exports.
Oil & Natural Gas soared 3.8 percent to 320.05 rupees, extending this year’s rally to 19 percent, the best performance among the 30 Sensex members. Net income fell 18 percent to 55.6 billion rupees ($1.03 billion) in the December quarter from a year ago, according to a filing yesterday. That still beat the 53.8 billion rupee median estimate in a Bloomberg survey.
Sun Pharmaceutical, the nation’s most valuable drugmaker, rallied 3 percent to 771.7 rupees. Bajaj Auto Ltd., India’s second-largest motorcycle maker, added 1.5 percent to 2,076.15 rupees. Tata Motors Ltd., owner of Jaguar Land Rover, increased 2.6 percent to 298.55 rupees. Bharti increased 1.9 percent to 322.3 rupees.
Jindal Steel & Power Ltd. retreated 3.3 percent to 392.2 rupees. India’s most valuable steelmaker said third-quarter net income fell 13 percent to 8.7 billion rupees, missing the 9.1 billion rupees estimated by analysts.
Steel Authority of India Ltd., the nation’s second-biggest producer, added 0.6 percent to 81.2 rupees, paring a two-day, 3.3 percent drop. The company, which is not part of the Sensex, today posted a 23 percent drop in third-quarter profit, missing analyst estimates.
Nine out of 24, or 38 percent, of Sensex companies that have reported December-quarter earnings have trailed estimates, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show.
“There’s money waiting on the margin for direction in company earnings,” Ritu Arora, chief investment officer at Canara HSBC Oriental Bank of Commerce Life Insurance Co. in Mumbai, told Bloomberg TV India. “We need earnings revision for the market upmove to sustain.”
The government’s policy measures prompted foreign funds to buy $24.5 billion of domestic shares in 2012, the highest among 10 Asian markets tracked by Bloomberg. The Sensex increased 26 percent in its biggest annual advance in three years. Overseas funds have bought a net $7.42 billion this year, a record for the period, data compiled by Bloomberg show.
“India is benefiting from flows to emerging markets in general,” Arora said. Policy “announcements must be sustained with action,” she said. “The inflows will be stock specific and fundamentals will come to the fore after the euphoria we saw last quarter of 2012.”
Sensex valuations have declined from the highest level since February 2012 the past two weeks. The measure trades at 13.5 times estimated earnings for the year through March 2014, higher than the MSCI Emerging Markets Index’s multiple of 10.4 times, data compiled by Bloomberg show.
The Indian gauge’s 14-day relative strength index, which measures how rapidly prices rose or fell in the period, was at 37 yesterday. A reading of below 30 is a signal to buy for some investors.
The CNX Nifty Index on the National Stock Exchange added 0.4 percent to 5,922.50. India VIX, which measures the cost of protection against losses in the Nifty, lost 2.2 percent.