Indian equities advanced for a second day this week, sending the benchmark index to a one-week high, as fertilizer makers and lenders climbed on the first day of a new financial year.
Rashtriya Chemicals & Fertilizers Ltd. led its peers higher after the government approved a plan to make gas prices more affordable. State Bank of India rebounded from its worst monthly drop in more than a year. Sun Pharmaceutical Industries Ltd., the most valuable drugmaker, surged to a record ahead of its merger with Ranbaxy Laboratories Ltd. next week.
The S&P BSE Sensex jumped 1.1 percent to 28,260.14 even as volumes were 21 percent less than yesterday. The markets are closed for holidays on Thursday and Friday. The gauge had its worst monthly drop in two years last month on concern earnings growth will trail estimates and an increase in U.S. borrowing costs may spur outflows.
“We’re seeing some fresh positions being built in the new fiscal year,” Vaibhav Sanghavi, managing director at Ambit Investment Advisors Pvt, said by phone from Mumbai. “Last month’s decline gave some comfort to investors. The long-term bullishness on Indian equities continues.”
Rashtriya Chemicals jumped 5.8 percent, taking this week’s gains to 13 percent, and National Fertilizers Ltd. surged 6.4 percent. Chambal Fertilizers & Chemicals jumped 7.6 percent and Fertilisers & Chemicals Travancore Ltd. soared 7.8 percent.
India cut the price of locally produced natural gas by 8 percent for six months beginning Wednesday, amid a decline in global energy costs. The price of the fuel varies from plant to plant because of different rates at which imported LNG gas is bought as well as the cost of transportation. Averaging rates of local and imported gas will ensure supply of fuel to all urea plants at a uniform cost, Telecom Minister Ravi Shankar Prasad told reporters on Tuesday after a Cabinet meeting.
State Bank and ICICI Bank Ltd., the biggest non-state-run lender, gained 2.4 percent each. HDFC Bank Ltd. added 1 percent.
Sun Pharma jumped 5.6 percent, the best performer on the Sensex. Ranbaxy, which will stop trading from April 6, was the most-traded stock by value, data compiled by Bloomberg show.
HCL Technologies Ltd. plunged 4 percent to a two-month low after saying its third-quarter revenue to be reported in U.S. dollars will be hurt by currency swings. March-quarter profit before interest and tax will fall about 80 basis points because of currency swings, according an exchange filing on Tuesday.
Infosys Ltd., the second-largest software exporter, was the worst performer on the Sensex. Tata Consultancy Services Ltd., the largest, slid 0.4 percent.
Stocks fell last month amid concerns earnings growth for the March quarter will lag estimates. Earnings-per-share for the gauge decreased in the three months ended December for the first time in six quarters, data compiled by Bloomberg show.
Macquarie Capital Securities India Pvt. cut its earnings-per-share forecast for Sensex companies by 2.2 percent for the year through March 2016, and trimmed its December target for the gauge by 4 percent to 31,600, Rakesh Arora, the head of research at the brokerage, wrote in an e-mail Tuesday.
Ambit Capital Pvt. cut its Sensex target for the year to March 2016 to 34,000 from 36,000, and reduced its profit-growth estimate to 16 percent from as much as 19 percent.
Global funds bought a net $44.4 million of local shares on March 30, taking this year’s inflows to $5.8 billion, the most among eight Asian markets tracked by Bloomberg.
The Sensex has gained 2.8 percent this year and trades at
15.8 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.9.