Indian Stocks Gain as Traders Close Bearish Bets Before Fed Meet

June 19 (Bloomberg) -- India’s benchmark stock index rose as some investors closed bearish bets before the U.S. Federal Reserve meeting that may clarify the outlook for stimulus. Metal producers led the gains.

The S&P BSE Sensex rose 0.1 percent to 19,245.70 at close in Mumbai, erasing an intraday loss of 0.6 percent. Four shares climbed for every three that dropped on the broader 50-member CNX Nifty index. Copper maker Sterlite Industries India Ltd. gained the most in three weeks. Aluminum producer Hindalco Industries Ltd. rose to a three-week high.

The Sensex has lost 4.1 percent since May 22 when Federal Reserve Chairman Ben S. Bernanke said policy makers could taper stimulus should the jobs market improve. India’s rupee traded near its record low, while foreigners sold domestic stocks for six days through yesterday. Bernanke will speak to reporters following the end of the two-day meeting today.

“There was some short-covering as nobody wants to keep an open position before such an important event,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by telephone from Kollam in southern India. “Investors’ globally are focusing on the outcome of the Fed meeting, which will act as a major trigger for the markets.”

Sterlite surged 2.7 percent to 85.3 rupees, the most since May 31. The stock has still lost 9 percent this month. Hindalco jumped 3 percent to 104.3 rupees, the highest level since May 30. Jindal Steel & Power Ltd. increased 2.5 percent to 245.8 rupees. The stock sank 13 percent last week. Tata Steel Ltd., the nation’s biggest producer of the alloy, added 2.1 percent to 291.1 rupees, the highest close in two weeks.

The four companies were the among the 10 biggest gainers on the Sensex today, data compiled by Bloomberg show.

HDFC, Bharti

HDFC Bank Ltd., the nation’s second-largest non-state-run lender by value, rose 1.2 percent to 665.2 rupees, and mortgage provider Housing Development Finance Corp. advanced 1.1 percent to 842.75 rupees. Cell-phone operator Bharti Airtel Ltd. jumped 2.6 percent to 299.55 rupees, the top performer on the Sensex.

The rupee rose 0.1 percent to 58.7150 per dollar at the 5 p.m. close, 0.5 percent off an all-time low of 58.9850 touched on June 11. The depreciation threatens to stoke import costs in a country that buys about 80 percent of its crude from abroad. The Reserve Bank of India June 17 maintained interest rates for the first time in four reviews and said it would need evidence of a “durable” cooling in inflation before paring rates again.

“The complete construct of local macroeconomic factors and the political landscape doesn’t inspire too much confidence,” P. Phani Sekhar, a fund manager at Mumbai-based Angel Broking Ltd., said in an interview to Bloomberg TV India today. “Rupee depreciation may continue for some time.”

Fund Outflows

Overseas investors sold a net $96 million of Indian stocks on June 18, paring this year’s inflows to $14.8 billion. That’s still a record for the period, data compiled by Bloomberg show. Foreigners pulled $431 million from local shares last week, the most since November 2011 and the first week of outflows since April, the data show.

The Sensex has lost 0.9 percent this year and is valued at 13.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.8 times. The Nifty index rose 0.2 percent to 5,822.25. Its June futures settled at 5,823.45. India VIX rose 0.9 percent.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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