India’s Sensex Caps Best Week in Two Months as Flows Pick Up

  • Local funds turn net buyers this week, add to offshore flows
  • Tata Motors is up 9% this week; Hero MotoCorp rises to record

Domestic money managers bought the most shares since May this week, joining overseas counterparts that have helped the Indian benchmark gauge climb to a 16-month high.

Local institutional investors have pumped $248 million into stocks in the past four days, the longest run of net purchases in three months and set to end eight weeks of withdrawals. Foreigners bought $279 million of shares in the period despite the prospect of U.S. interest rates rising, data compiled by Bloomberg show.

The flows helped the S&P BSE Sensex advance 2.7 percent this week, the best performance in two months. The gains added to angst about valuations that are near the highest level in 16 months, with some investors predicting the momentum will cool in coming weeks as the market consolidates.

IndexChangeHighest Since
Sensex+0.4%April 2015
Nifty+0.4%April 2015
S&P BSE MidCap+0.5%Record
S&P BSE SmallCap+0.4%Near Record
S&P BSE Auto+1%Record
S&P BSE Bankex+0.6%March 2015

“Valuations are rich as the rally since February has been pretty much one way,” Kaushik Dani, a fund manager at Karvy Stock Broking Ltd. in Mumbai, said by phone. “The market will consolidate at current levels before making the next move forward.”

Expensive valuations have been partly responsible for Indian money managers offloading stocks. Domestic funds pulled a total 126 billion rupees ($1.9 billion) from June through August, the longest stretch of withdrawals since the five-month period ended July 2014, data compiled by Bloomberg show. In comparison, global funds invested a net $3.9 billion amid optimism central banks will stay supportive of growth.

The Sensex is valued at 16.4 times projected 12-month profits, near the highest level since April 2015, and a 30 percent premium to the MSCI Emerging Markets Index. The BSE mid-cap index trades at 35 times reported earnings after the rebounding 37 percent from a low in February, data compiled by Bloomberg show.

  • Tata Motors Ltd., owner of Jaguar Land Rover, rose 1.1 percent, taking this week’s rally to 9.2 percent. That’s the best performance on the Sensex. Jaguar sales rose to 3,298 units last month from 1,143 vehicles a year earlier, according to a statement on its website. Land Rover sales rose to 6,031 units versus 5,225

  • Hero MotoCorp Ltd. advanced 0.9 percent to a record. 

  • Shipping Corp of India Ltd. soared 6.8 percent, the most since July 5, after saying it plans to revive a 40-year-old joint venture with an Iranian company.

  • Hindustan Construction Co. soared 8.4 percent, taking the week’s surge to 51 percent. The company expects to get 58 billion rupees after settling claims with state agencies over the next 18 months, chairman Ajit Gulabchand said in a phone interview Thursday.

  • Coal India Ltd., the world’s biggest miner of the fuel, fell 1.7 percent after it reported the lowest production and shipments in three years after heavy rain flooded its mines. Output in August dropped 10.4 percent from a year ago to 32.4 million metric tons and shipments fell 9.6 percent to 36.72 million tons, both plunging to the lowest since the same month in 2013.

The markets are closed on Monday for a public holiday.

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