Most Indian stocks rose following the benchmark index’s biggest two-day decline in a month. Industrials and automakers advanced.
Larsen & Toubro Ltd. gained 1.8 percent, helping a measure of capital goods producers to its first advance in three days. Mahindra & Mahindra Ltd. increased 1.2 percent, sending a gauge of automakers to its biggest climb since Sept. 19. State Bank of India fell for the third day after Moody’s Investors Service cut the lender’s credit rating.
The S&P BSE Sensex added 0.1 percent to 19,920.21, with volume 22 percent below the 30-day average at the close. The gauge’s 30-day volatility climbed to a four-year high before the expiry of the monthly derivatives this week. The Sensex fell 3.6 percent in the past two days after the Reserve Bank of India raised the main rate last week for the first time since 2011, stoking concerns the central bank may tightening monetary policy further to cool inflation.
“The market found some support after a steep fall but will likely trade in a narrow band,” Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries in New Delhi, said by phone.
Larsen added 1.8 percent to 826.8 rupees, the most since Sept. 19. Power equipment maker Bharat Heavy Electricals Ltd. advanced 1.4 percent to 131.30 rupees, the biggest increase since Sept. 19. The S&P BSE Capital Goods Index advanced 1.1 percent, halting a two-day 6.2 percent slide.
Maruti Suzuki India Ltd., the nation’s biggest carmaker, added 0.7 percent to 1,410.8 rupees. Mahindra increased 1.2 percent to 871.5 rupees. Tata Motors Ltd., owner of Jaguar Land Rover, rose 1 percent to 337.1 rupees. The S&P BSE India Auto index gained, ending a two-day drop that was the most in a month.
State Bank declined 0.6 percent to 1,644.95 rupees, the lowest level in a week. The lender’s debt rating was cut to Baa3 from Baa2 yesterday by Moody’s, which also changed the outlook on the bank’s D+ financial strength ranking to negative from stable, citing a slowdown in the economy and the need for a capital injection from the government. Bank of Baroda and Punjab National Bank slumped more than 3 percent intraday after Fitch Ratings downgraded the state-owned lenders.
Bad loans at the nation’s banks climbed to 3.9 percent of total lending as of June 30, a six-year high, from 2.4 percent in March 2011, as economic growth slowed to a decade low, India’s central bank said in a Aug. 22 report. State-owned lenders account for the bulk of the surge in soured debt, according to the report.
Overseas investors sold $4.2 million of local shares on Sept. 23, after plowing a net $980 million last week, the most since the period ended Feb. 1, exchange data show. Foreigners have invested a net $13.4 billion into Indian stocks this year, the second-highest among 10 Asian markets tracked by Bloomberg.
The CNX Nifty Index on the National Stock Exchange rose 0.1 percent to 5,892.45. Rollovers in Nifty futures for October delivery were at 38 percent yesterday, compared with 29 percent average of the previous three series, Edelweiss Securities Ltd. said in a report today. Derivative contracts in India expire on the last Thursday of the month.
“Both bullish and bearish positions are equally balanced and the market lacks a clear direction,” Jitendra Panda, head of broking at Capital First Ltd., said by phone from Mumbai.
The Sensex has risen 2.5 percent this year in rupee terms and is valued at 13.8 times projected 12-month earnings, data compiled by Bloomberg show. It has lost 10.4 percent this year in dollar terms. The MSCI Emerging Markets Index is trading at 10.6 times.