- Sensex capped best quarter since Modi’s 2014 election win
- State-owned refiners rally to records on consumption boost
Indian stocks advanced for a fifth day, with the benchmark gauge ending three weeks of declines, amid expectation measures taken by Prime Minister Narendra Modi will lead to higher demand and bolster company earnings.
State-run fuel retailers Bharat Petroleum Corp. and Indian Oil Corp. jumped to records on optimism the $13 billion pay jump for government staff will boost demand for cars. Oil & Natural Gas Corp. surged as much as 6.2 percent in the last half hour of trade. Cigarette maker ITC Ltd. rallied to a 16-month high, while Dr. Reddy’s Laboratories Ltd. climbed to its highest price in more than seven months.
The S&P BSE Sensex added 0.5 percent at the close, taking the week’s gain to 2.8 percent and recouping all its losses since the close of trading on June 23 when Britain went to the polls in the Brexit referendum. Asian equities are set for the biggest weekly climb since April as policy makers signaled looser monetary policies to buffer the impact of the U.K.’s decision to leave the European Union.
“The reforms momentum has gathered pace, the monsoon is on track, commodity prices are expected to remain low and the Fed’s rate-increase plan has been pushed back by the Brexit vote,” Kaushik Dani, a fund manager at Karvy Stock Broking Ltd. in Mumbai, said by phone. “Investors are betting that these benefits will translate into higher profits for companies in the next few quarters. India is in a sweet spot.”
The Sensex on Thursday capped its best quarter since Modi’s election victory in May 2014. The government in June eased rules on foreign direct investment, approved a new mining policy and accepted a plan to raise salaries for federal staff. The measures helped soften the impact of the central bank Governor Raghuram Rajan’s impending departure that was announced less than a week before the Brexit vote.
Offshore funds invested $552 million in Indian stocks in June, marking a fourth straight month of purchases, as company earnings recovered after falling in four of the previous five quarters and the weather office forecast above-normal rainfall after two years of droughts. The inflows lifted the Sensex 18 percent from the lows reached in February.
Equitas Holdings Ltd. rallied to a record after the companies received a permit from the Reserve Bank of India to start a small finance bank. The stock has risen 67 percent since its trading debut in April.
Mahanagar Gas Ltd., a city gas supplier, ended at 520.3 rupees on the first day of listing, 24 percent above its IPO price of 421 rupees. The company’s founders last month raised 10.4 billion rupees selling 24.7 million shares. The sale was oversubscribed 64.5 times.