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Indian Stocks Climb Amid Expiry as Bharat Heavy, Sun Pharma Gain

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Sept. 26 (Bloomberg) -- India’s benchmark stock index rose, led by drugmakers and consumer-goods companies, amid expiry of monthly derivatives contracts.

Sun Pharmaceutical Industries Ltd. increased 2.2 percent, sending a gauge of health-care companies to a record. Bharat Heavy Electricals Ltd., the nation’s largest power-equipment maker, climbed to a two-month high. Cigarette maker ITC Ltd. gained the most in a week. ABG Shipyard Ltd. surged by the 20 percent limit, pacing a rally among shipping stocks.

The S&P BSE Sensex rose 0.2 percent to 19,893.85 at the close, after swinging between a gain of as much as 0.7 percent and a 0.2 percent decline. The 30-stock gauge has moved between a one-year low and a 34-month high in the past month. It fell as the rupee slid to a record in August and rallied after the central bank Governor Raghuram Rajan announced plans to shore up the currency, and the Federal Reserve kept its stimulus.

“As long as there is uncertainty, investors will prefer the safety of defensives like pharmaceutical shares,” Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt., said in a phone interview.

Sun Pharmaceutical rose to 584.95 rupees, a record close. Taro Pharmaceutical Industries Ltd., the Israeli company that’s 61.08 percent owned by Sun, will continue to rise on prospects revenue growth will exceed estimates, Credit Suisse Group AG said. Taro will increase sales by 5 percent over the next four years, beating analysts projections for a decline in revenue, Anubhav Aggarwal, an analyst at Credit Suisse, said in a report e-mailed yesterday.

Bharat Heavy climbed 5.3 percent to 150.75 rupees, the highest price since July 31 and the second-biggest gainer on the MSCI Emerging Markets Index. ITC advanced 1.3 percent to 349.3 rupees, most since Sept. 19.

Baltic Index

ABG Shipyard and Bharati Shipyard surged by the daily 20 percent limit. State-run Shipping Corp of India Ltd. jumped 11 percent to a four-month high. Great Eastern Shipping Co. surged to the highest close since January 2011. The Baltic Dry Index, a benchmark of commodity shipping rates, is trading at 2,127, a two-year high, after slumping from as high as 11,793 in 2008 because of a record shipbuilding program.

“The sudden spurt is do with the Baltic Dry Index moving up quite sharply,” Paras Bothra, vice president for equity research at Ashika Stock Broking Ltd., said by telephone from Mumbai. “That’s an indicator that the global economy is recovering.” Ancillary businesses such as shipyards, which aren’t direct beneficiaries, “took a cue” from the rally in shipping stocks, he said.

Nifty Rollovers

The CNX Nifty Index on the National Stock Exchange gained 0.1 percent to 5,882.25, extending this month’s advance to 7.5 percent. Rollovers in Nifty futures were at 55 percent yesterday, compared with an average of 48 percent average of the previous three series, Edelweiss Securities said. Indian derivative contracts expire on the last Thursday of the month.

“Higher amount of rollovers is giving conviction to the market that the October series will be positive,” said KRC’s Choksey. “Next month may probably be favorable as the Reserve Bank may roll back some liquidity-tightening measures.”

The RBI in July raised two interest rates and tightened lenders’ access to cash to support the rupee. Governor Rajan on Sept. 20 raised the benchmark interest rate for the first time since 2011 to curb inflation that’s dimmed the outlook for economic growth.

The Sensex has risen 2.4 percent this year and trades at 13.8 times projected 12-month earnings, compared with the five-year average of 14.1 times, data compiled by Bloomberg show. The MSCI Emerging Markets Index is trading at 10.5 times.

Overseas funds bought a net $69 million of domestic shares on Sept. 25, data from the regulator showed yesterday. Global funds have bought a net $2 billion of the nation’s stocks this month, poised for the first monthly net inflow since May. They pulled $3.7 billion in the three months to Aug. 31 as capital fled emerging markets amid concerns the U.S. Federal Reserve would curtail record stimulus.

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

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