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Indian Stocks Rise After Worst Quarter in Five; Industrials Lead

April 1 (Bloomberg) -- Indian equities climbed, with the benchmark index rebounding from its first quarterly drop since December 2011. Industrial stocks led the advance.

The S&P BSE Sensex rose 0.2 percent to 18,864.75 at the close in Mumbai, with volumes 47 percent less than the 30-day average. The CNX Nifty index on the National Stock Exchange of India added 0.4 percent. Larsen & Toubro Ltd., India’s largest engineering company, jumped 2.4 percent after saying it won a 56.9 billion rupee ($1.04 billion) order. Bharat Heavy Electricals Ltd. rallied 3.1 percent, the most since December.

The Sensex slid 3 percent in the three months ended March, its first decline in five quarters, amid the weakest economic growth in a decade, widening deficits and the highest inflation among major emerging markets. India’s manufacturing expansion slowed to a 16-month low in March, a survey showed today.

“A rebound was expected after the weakness we’ve seen of late,” Jitendra Panda, head of broking at Capital First Ltd., said by phone today. “For a sustainable rise, the market would need to see some improvement in the macroeconomic situation.”

India’s economy grew 4.5 percent from a year ago in the final three months of 2012, the weakest pace in almost four years. The statistics bureau predicts an annual expansion of 5 percent in the year through March, the lowest in a decade.

A gauge of industrial stocks was the biggest gainer among the 10 industry groups of the MSCI India Index today. Larsen climbed 2.4 percent to 1,398.65 rupees, the steepest gain since March 6. The company won a contract to set up two coal-fired thermal units in Baran district in the northern state of Rajasthan, an exchange filing showed.

BHEL, Infosys

Bharat Heavy, the nation’s largest power-equipment maker, rallied 3.1 percent to 182.50 rupees, the most since Dec. 18. The stock sank 22 percent in the three months ended March 31, the sharpest decline since the quarter ended Dec. 31, 2011. Infosys Ltd., India’s second-largest software exporter, rose 1.9 percent to 2,944.2 rupees. Dr. Reddy’s Laboratories Ltd. jumped 3.4 percent to 1,825.90 rupees, the most in a year.

The Sensex is valued at 12.7 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s multiple of 10.5 times. The 50-stock CNX Nifty index rose 0.4 percent to 5,704.40 and its April futures settled at 5,726.55. India VIX, which measures the cost of protection against losses in the Nifty, slid 2.4 percent to 14.85.

Sterlite Industries (India) Ltd., the nation’s biggest copper producer, tumbled 4.5 percent to 89.50 rupees, its lowest close since June 4. The Tamil Nadu Pollution Control Board ordered the company to close its smelter in Tuticorin. The stock was the worst performer on the Sensex.

Foreign funds bought a net $104 million worth of Indian stocks on March 26, extending this year’s purchases to $10.2 billion, data compiled by Bloomberg show. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg. The market regulator provides data on trades by foreign investors with a day’s lag. Indian markets were closed on March 27 and 29 for public holidays.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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