- Foreigners pull $505m from shares this month before Fed meet
- GST bill unlikely to be passed in current parliament session
Indian stocks climbed the most in a month, tracking gains in global equities, after the Federal Reserve cleared months of uncertainly by raising borrowing costs.
Tata Steel Ltd. was the top performer on the S&P BSE Sensex index. Hindalco Industries Ltd. and Vedanta Ltd., the nation’s largest aluminum and copper producers, rallied more than 3 percent each. Reliance Industries Ltd., the owner of the world’s largest refining complex, soared to a five-month high. Tata Global Beverages Ltd., which has a venture with Starbucks Corp., was among the top gainers on a gauge of mid-cap stocks.
The Sensex surged 1.2 percent, the steepest climb since Nov. 19, and the S&P BSE MidCap Index posted its biggest gain in two months. Global markets cheered the Fed’s assurances that any further moves will be gradual after the first increase in almost a decade. Foreign funds pulled $874 million from local stocks this quarter in the run up to the Fed meeting.
“The biggest risk the market had in the last six months was the Fed rate hike and that’s behind us now," V. Srivatsa, a fund manager at UTI Asset Management Co., which has $14 billion, said in an interview with Bloomberg TV India in Mumbai. “We expect the market to bottom out at these levels." He expects shares of power utilities to beat the indexes over the next six months.
Tata Steel jumped 5.1 percent, the most since Oct. 5. Hindalco rose 3.5 percent, paring this year’s loss to 48 percent. Vedanta surged 3.7 percent to its highest since Dec. 8. Reliance climbed 3.2 percent to its highest level since July 28.
Thursday’s gains may not extend as concern grows about the passage of the goods-and-services tax bill in parliament. An Indian government official Wednesday ruled out a last-minute agreement with the opposition on a proposed national sales tax, dealing a blow to Prime Minister Narendra Modi’s reform agenda.
“It looks like the GST bill won’t be passed in the current parliament session,” said Arun Kejriwal, a director at Mumbai-based Kejriwal Research & Investment Pvt. “The market has already advanced for four days, so further gains may be limited.”
The delay imperils Modi’s plan to implement the goods-and-services tax from April 2016. Once parliament passes the bill to amend the Constitution and pave way for the GST, it must be ratified by at least 15 of India’s 29 states before it becomes a law.
International investors sold a net $58.7 million of Indian stocks on Dec. 16, paring this year’s inflows to $2.67 billion. The Sensex has fallen 6.2 percent this year and trades at 15.2 times projected 12-month earnings, compared with a multiple of 11.2 for the MSCI Emerging Markets Index.