Indian airlines, paint makers and refiners rallied, with the benchmark gauge trading near a 12-week high in a volatile trading session, amid speculation a drop in crude prices will benefit the oil-importing nation.
Jet Airways India Ltd., the biggest listed carrier, rose to a five-week high. Asian Paints Ltd., India’s biggest paint maker, surged for the sixth day to a three-month high. Berger Paints India Ltd. and Kansai Nerolac Paints Ltd. both rallied more than 4 percent each. State-run refiner Hindustan Petroleum Corp. climbed to a record.
The S&P BSE Sensex fell 0.1 percent to 28,171.69 at the close in Mumbai, after changing directions at least seven times. Brent slid below $60 a barrel on Monday for the first time since April amid mounting concern about economic stability in Europe and Asia. On Tuesday, it traded near the lowest levels since April amid a deepening debt crisis in Greece and indications a supply glut is persisting. India imports about 80 percent of its crude oil.
“Investors piled on stocks that are likely to benefit from a lower crude price,” Paras Bothra, vice president of equity research at Ashika Stock Broking Ltd., said on Tuesday. “The broader market will remain volatile unless clarity emerges on the Greece issue or India corporate earnings show the way.”
Asian stocks fluctuated as investors weighed developments in Greece’s debt crisis and Chinese shares in Hong Kong followed their mainland peers into a bear market.
The MSCI Asia Pacific Index dropped less than 0.1 percent after gaining as much as of 0.8 percent earlier in the day. While the initial shock waves that hit markets after Greece’s decision to call a referendum on austerity terms dissipated into a ripple by the end of Monday trading, losses in Chinese stocks continued as a flurry of government measures failed to stabilize the market.
A decline in crude would give the Indian government more room to boost growth through spending on infrastructure.
The drop in oil prices is “great news for India, for our economy and fiscal issues,” Gaurang Shah, a vice president at Geojit BNP Paribas Financial Services Ltd., said in an interview with Bloomberg TV India.
Jet Airways jumped 8.2 percent, extending Monday’s 11 percent surge. Budget carrier SpiceJet Ltd. gained 4.8 percent, the most since May 29.
Provincial taxes make jet fuel in India the costliest in Asia. Jet fuel costs are as high as 60 percent of an airline’s total expenses, which means any downside on fuel will significantly cut a carrier’s total costs.
Asian Paints, Hindustan Petroleum
Asian Paints gained 5.2 percent to its highest level since April 15. Berger Paints jumped 4.1 percent to its highest level since May 5, while Kansai Nerolac soared 6.5 percent, taking this month’s gains to 15 percent.
Hindustan Petroleum added 3.3 percent to a record.
The Sensex has risen 2.4 percent this year and trades at 14.4 times projected 12-month earnings, the cheapest since May 2014. The MSCI Emerging Markets Index is valued at a multiple of 11.3.
Foreign investors bought a net $56 million of Indian stocks on July 3, extending this year’s inflow to $6.3 billion.