Indian Stocks Rally on BOJ Move as Yes Bank Surges on Earnings

  • Sensex advance pares January drop to 4.8%, most since August
  • Yes Bank, Praj Industries lead gains as profit beat estimates

Indian stocks advanced, paring the biggest monthly loss since August, as Asian equities climbed after Japan’s central bank adopted a negative interest rates and maintained its record asset purchase plan.

Yes Bank Ltd. soared the most in two years and Praj Industries Ltd. jumped 13 percent after their fiscal third-quarter earnings beat estimates. Coal India Ltd. surged the most since August. Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, rose the most in 10 months. Maruti Suzuki India Ltd. and ICICI Bank Ltd. fell after net incomes missed forecasts.

The S&P BSE Sensex jumped 1.6 percent, ending three weeks of losses as central banks signaled they may be prepared to act in order to quell a turmoil in the global markets. Bank of Japan’s move comes after the European Central Bank signaled it could increase stimulus as soon as March. Bets the Federal Reserve will raise borrowing costs again this quarter have dropped.

“The Bank of Japan move was a shot in the arm for the bulls," Shishir Bajpai, a director at Mumbai-based IIFL Wealth Management Ltd., which has $12 billion under management and advisory. “Valuations in almost every sector are looking attractive after the deep selloff.”

The Sensex declined 4.8 percent in January, capping its worst monthly start to any year since 2011. The gauge fell to its lowest level since May 2014 on Jan. 21, coming within 1 percentage point of a bear market, as global funds pulled $1.8 billion from local shares amid anxiety over a rout in Chinese equities and oil prices.

Earnings Reports

Yes Bank surged 11 percent, the most since September 2013. The lender reported profit of 6.76 billion rupees, beating the estimated 6.35 billion rupees. Praj rallied 13 percent, the most since Dec. 16. The stock has surged 20 percent this week, the most since the period ended June 5.

“Everyone was expecting a subdued earnings season, so any positive surprise is being rewarded by the market,” IIFL’s Bajpai said.

Coal India increased 4.4 percent, the most since Aug. 25. Sun Pharmaceutical rallied the most since April 6. Hero MotoCorp Ltd. had the steepest climb since September 2014. Hindustan Unilever Ltd. gained 3.2 percent, the most since Sept. 30.

Maruti posted a profit of 10.2 billion rupees after Thursday’s market close, lower than analysts estimated, as costs for promoting new models eroded gains from an increase in local deliveries. The stock lost 0.2 percent, paring an intraday loss of 4.4 percent.

Bad Loans

ICICI Bank, the biggest private lender, reported its slowest quarterly profit growth in six years as bad loans surged. The stock lost 1.3 percent, paring an earlier drop of as much as 7.4 percent.

Larsen & Toubro Ltd., the largest engineering company, reported after market hours third-quarter profit of 10.4 billion rupees, matching analyst estimates. The shares added 2.5 percent.

Eight of the 15 Sensex firms that have posted December-quarter results so far have beaten or matched estimates, versus 57 percent in the three months ended September and 60 percent in June, data compiled by Bloomberg show.

NTPC Ltd. lost 1.3 percent after its third-quarter sales missed estimates. The top power producer reported sales of 173.2 billion rupees, missing the estimated 190 billion rupees. Its profit of 24.9 billion rupees beat the estimate 22.7 billion rupees.

The Sensex trades at 15 times its projected 12-month profits, compared with a multiple of 11 for the MSCI Emerging Markets Index.

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