India Sensex Rebounds as Oil Rally Lifts Metals, Consumer Stocks

  • Tata Steel, ITC, HDFC Bank help Sensex reverse intraday drop
  • Bank of Baroda tumbles after posting surprise quarterly loss

Indian stocks extended last week’s gain after a recovery in global oil and commodity prices lifted metalmakers and materials companies.

Tata Steel Ltd. climbed the most in three weeks. Cigarette maker ITC Ltd., which has the fourth-highest weighting on the S&P BSE Sensex, had the steepest advance in two months. Dr. Reddy’s Laboratories Ltd. increased to a two-week high. Bank of Baroda slumped the most in eight months after reporting a surprise quarterly loss, while HDFC Bank Ltd. rose to a record.

The Sensex climbed 0.6 percent at the close in Mumbai, erasing an intraday decline of 0.5 percent. The reversal came as Brent crude rose to a six-month high, leading a rebound in commodities and boosting Asian shares from a one-month low. Oil extended last week’s gains as Goldman Sachs Group Inc. raised its price forecast for the second half to $50, from a March estimate of $45.

“A recovery in oil and commodities sparked a late rally in metalmakers, private banks and automobile stocks,” A. K. Prabhakar, the head of research at IDBI Capital Capital Market Services Ltd., said by phone from Mumbai. “Long-only funds are buying consumer stocks on hopes of a good monsoon.”

The gauge completed its best week in a month on Friday amid optimism that company earnings are recovering after the worst run since the global financial crisis. Investors have also been drawing comfort from this year’s prediction for above-normal rainfall after back-to-back deficits and the passage of key economic bills in parliament.

HDFC Bank surged 1.9 percent to 1,162.80 rupees, while Bank of Baroda tumbled 8.3 percent to the lowest level since March 29. The lender posted a fourth-quarter loss of 32.3 billion rupees versus a profit of 5.98 billion rupees a year ago, according to a filing. Provisions rose to 68.6 billion rupees from 18.2 billion rupees.

“Private banks will keep gaining market share versus state-run banks,” Parag Thakkar, head of institutional sales at HDFC Securities Ltd. in Mumbai, said in an interview with Bloomberg TV India on Monday. Their balance sheets are cleaner and there’s more clarity on earnings.” Thakkar is also bullish on producers of agro-chemicals, which would benefit the June-September monsoon rains, forecast to be above-normal this year after two successive droughts.

Foreign investors bought $240 million of local stocks on May 13, taking this year’s inflows to $1.8 billion. They invested $585 million in April after an inflow of $4.1 billion in March, which was the highest in three years.

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