- Nifty closes above 8,000 mark for first time in seven months
- Global stocks climb amid optimism U.S. can handle higher rates
Indian stocks rallied the most in Asia, with the benchmark gauge erasing this year’s loss, as earnings of some of the biggest companies bolstered optimism about the recovery in the nation’s economy.
Larsen & Toubro Ltd., the most-valuable engineering company, jumped the most in seven year after its quarterly profit beat estimates. Oil & Natural Gas Corp. climbed to a one-month high after its results. State Bank of India, the nation’s biggest lender, surged the most in two months, while Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, rose 4.9 percent before their earnings on Friday.
The S&P BSE Sensex soared 1.9 percent to its highest close since Nov. 4, capping a three-day, 4.5 percent advance. The NSE Nifty 50 Index jumped 1.7 percent, rising above a key resistance level of 8,000 for the first time in seven months. Gains in global equities for a third day amid increasing signs of strength in U.S. economy provided tailwinds to Asia’s fourth-biggest stock market.
“Better-than-expected earnings, buoyant global markets and a favorable outlook on the monsoon led to the rally," Prateek Agrawal, chief investment officer at ASK Investment Managers Pvt., which has about $1.1 billion, said by phone from Mumbai. “People are expecting the earnings trajectory to improve this fiscal year and beyond." Agrawal said he’s bullish on shares of makers of agro-chemicals and pharmaceuticals.
Corporate earnings are recovering after falling in four of the last five quarters, the worst run since the financial crisis. Thirteen out of 23, or 57 percent, of Sensex companies that have reported March-quarter results have beaten or matched estimates. That compares with 53 percent in the December quarter, data compiled by Bloomberg show.
Showers in the June-September season starting June 1 are seen at 109 percent of the mean of about 89 centimeters (35 inches), more than the 105 percent predicted in April, Skymet Weather Services Pvt., a New Delhi-based private forecaster, said Tuesday. That’s more than the 106 percent forecast by the state-owned weather bureau and would be the highest since 1994.
Larsen & Toubro jumped 14 percent, the most since May 2009. The company reported Wednesday profit last quarter climbed to 24.5 billion rupees ($364 million), beating the average analyst estimate compiled by Bloomberg. Chairman A.M. Naik forecast revenue will grow at least 12 percent in the year to March, and orders will increase 15 percent.
“Larsen is a proxy for other investments as it signals first-level development happening in the economy," Deven Choksey, managing director of K.R. Choksey Shares & Securities Ltd., said in an interview to Bloomberg TV India in Mumbai.
ONGC gained 2.8 percent to its highest level since May 2. Net income increased 12 percent to 44.2 billion rupees in the March quarter. That beat the 23.8 billion-rupee average of 20 analyst estimates compiled by Bloomberg.
The Nifty gained for a third day to close at 8,069.45, the highest level since Oct. 29. The gauge faces no obstacle till 8,330, Ayush Nagaraj, a sales trader at Sanford C. Bernstein, said by e-mail.
“It is one of the few Asian indices to have taken out April highs, where the global rally from February lows had stalled,” he said. “None of the momentum indicators are overbought yet.”
Foreigners bought $76 million of domestic stocks on May 25, taking the month’s inflow to $120 million. They bought $585 million of shares in April and $4.1 billion in March, which was the most in three years.
The Sensex has climbed 1 percent this year and trades at 16.3 times 12-month forward earnings. That compares with 11.5 times for the MSCI Emerging Markets Index.