- GAIL India, Dr. Reddy's counter losses in software makers
- S&P BSE Sensex's 14-day RSI recovers from two-month low
Indian stocks rose, with health-care companies and industrials helping the benchmark index recoup from a two-month low, overcoming losses in regional equities after the terror attacks in Paris.
GAIL India Ltd., the largest natural-gas supplier, jumped the most in two months after its unit Mahanagar Gas Ltd. filed papers with the market regulator to sell shares in an IPO. Dr. Reddy’s Laboratories Ltd. had the steepest gain since September after slumping 21 percent in the past two weeks, while rivals Lupin Ltd. and Cipla Ltd. added at least 1.2 percent. Tata Steel Ltd. and Hindalco Industries Ltd., the nation’s top aluminum producer, were among the best performers on the S&P BSE Sensex.
The Sensex jumped 0.6 percent to 25,760.1 at close in Mumbai, reversing an intraday loss of 0.6 percent. The gauge completed its third weekly loss on Friday after Prime Minister Narendra Modi’s Bharatiya Janata Party lost a state election, stoking concern that he will struggle to push through policies in the parliament. The declines dragged the gauge’s 14-day relative strength index to near a two-month low, signaling a possible rebound.
“The market rebounded from an oversold territory as investors used the panic to add to their portfolios,” Jitendra Panda, chief executive officer at Peerless Securities Ltd., said by phone from Kolkata. “There’s speculation that moderating inflation will enable the Reserve Bank of India to lower rates next quarter.”
India’s wholesale prices fell for a 12th straight month even while he pace of deflation eased. Consumer prices -- the central bank’s benchmark -- rose 5 percent last month from a year earlier after a 4.41 percent climb in September. RBI Governor Raghuram Rajan has said he can reach his 5 percent CPI target for March 2017 with the current monetary stance. He reviews rates again on Dec. 1, having cut four times this year.
“We expect more than 200 basis points of rate cuts in 2015-2016,” Christopher Wood, chief equity strategist at CLSA Asia Pacific Markets, told reporters in Gurgaon, near New Delhi on Monday. “While earnings growth continues to be downgraded, the offsetting positive is the significant rate cuts.” The brokerage remains “overweight” on Indian equities because the country benefits more than its regional peers from lower oil and commodity prices, he said.
Fifty-seven percent of Sensex members that have posted September quarter results have matched or beaten estimates, versus 60 percent in June.
GAIL India jumped 4.5 percent, the most since Sept. 8. GAIL and BG Asia Pacific Holdings Pte. each hold 49.75 percent of Mahanagar Gas, which supplies homes and industrial users in Mumbai. The two founders plan to sell a combined 24.7 million shares, according to the draft offer filed with the regulator.
“The Mahanagar Gas IPO and the expected pipeline tariff hike are the likely triggers for GAIL,” Dhaval Joshi, an analyst at Emkay Global Financial Services Ltd., said by phone from Mumbai. “There’s limited downside for the stock after recent sharp correction." The stock touched a two-month low on Nov. 10.
ICICI Bank Ltd. and State Bank of India, the nation’s largest by assets, advanced at least 2.1 percent, while ITC Ltd., the top tobacco company, gained the most in three weeks.
International investors sold a net $127 million of Indian stocks on Nov. 13, reducing this year’s inflows to $4.1 billion. The Sensex has fallen 6.3 percent this year and trades at 15.1 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.