Indian Stocks Cap Best Weekly Climb Since June on Global Rally

  • Metalmakers, energy stocks climb amid rebound in Asia equities
  • Sensex profit growth projected to recover over next 12 months

India’s benchmark stock-index posted its biggest weekly advance since June, tracking global equities, after the minutes of the U.S. Federal Reserve indicated that the central bank isn’t in a hurry to raise interest rates. Gains in the S&P BSE Sensex were fueled by metal producers, energy companies and utilities.

The Sensex jumped 0.9 percent to 27,079.51, the highest close since Aug. 21. The gauge has climbed 3.3 percent this week, rallying after its worst quarterly loss in almost four years, as signs the U.S. Federal Reserve won’t rush to raise interest rates buoyed Asian stocks. The measure will advance about 7 percent from Thursday’s close to 28,629 in the next 12 months, according to the median estimate in a quarterly Bloomberg News survey of five analysts.

“We’re being supported by positive local and U.S. cues,” Jitendra Panda, chief executive officer at Peerless Securities Ltd., said by phone from New Delhi. “Lower raw material costs and the reduction in interest rates” will benefit company earnings, he said.

The MSCI All-Country World Index was heading for its largest eight-day rally since 2011, with the Stoxx Europe 600 Index up for the sixth straight session. Global stocks have been staging a comeback in the wake of their worst quarter since 2011 as signs of an uneven recovery in the U.S. job market and data signaling slowing growth from China to Germany heighten speculation the Fed won’t raise interest rates until next year.

Profit Outlook

Reserve Bank of India Governor Raghuram Rajan last week took advantage of a rout in commodity prices to lower the policy rate by 50 basis points, twice as much as most economists expected. The increased monetary easing and falling inflation has bolstered the outlook for profits. While analysts have cut the estimates for fiscal 2016 profits by 13 percent since the start of April, they predict profits will grow 2.2 percent in the July-September period and 11 percent in the December quarter, the data show.

Profits for the 30 Sensex companies climbed 1 percent in the June quarter, following a 41 percent drop in the prior three months, the data show.

Hindalco surged 1.9 percent to the highest level since Aug. 21, while Vedanta rallied 11.5 percent, paring this year’s declines to 52 percent. Tata Steel increased 4.3 percent to its highest price since Aug. 18.

ICICI Bank Ltd. climbed to its highest level since Aug. 21. State Bank of India completed its biggest weekly gain since the period ended Sept. 20. Oil & Natural Gas rose 2.3 percent to highest since Aug. 17.

Global funds sold a net $2.6 million of Indian stocks on Oct. 7, paring this year’s inflow to $3.8 billion, the largest among eight Asian markets tracked by Bloomberg.

The Sensex has fallen 1.5 percent this year and trades at 15.7 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.4.

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