Indian Stocks End Four-Day Advance Before Central Bank Meetings

  • Trading volume on NSE Nifty50 Index is 29% below average
  • Foreigners buy most Indian equities this quarter since 2015

Indian equities ended a four-day advance as investors awaited policy decisions from the Federal Reserve and the Bank of Japan.

Technology and consumer-goods companies countered advances in metal producers, while a gauge of developers fell the most among 10 industry indexes. Volume in a gauge of top 50 companies was 29 percent below a 30-day average.

IndexChangeMost Since
Sensex-0.4%Sept. 12
Nifty 50-0.4%Sept. 12
S&P BSE MidCap+0.1%Second day of gains

Indian equities have climbed in seven of 12 sessions in September as investors weighed chances that two of the world’s most influential central banks will continue policies that have supported demand for riskier assets. Economists surveyed by Bloomberg expect the Fed to keep rates unchanged, while strengthening guidance about its intentions to raise borrowing costs soon. Traders are divided over whether the BOJ will add to its stimulus in its review Wednesday.

“The undertone of the market is strong, save for the near-term concerns about the BOJ and Fed meetings,” Rajesh Agarwal, the head of research at AUM Capital Market Pvt, said by phone from Kolkata. “The market will rally if the central banks maintain the status quo.” He’s advising investors to buy shares of state-owned lenders as an improving economy moderates the risk to the nation’s banking system.

The pace of bad-loan formation in India will slow over the next 12 to 18 months as the banking industry is moving past the worst point of its asset quality down cycle, Moody’s Investors Service said in a statement Monday. The operating environment for lenders is supported by a stabilizing economy, the rating company said. Gross domestic product grew 7.1 percent in the April-to-June period from a year earlier, the fastest pace among large economies.

Global funds have bought $3.6 billion of Indian stocks in the current quarter, the most since the three months ended March 2015 and the highest in Asia after Taiwan and South Korea, as the passage of economic reforms, improvement in public finances and timely monsoon rains after two years of drought lured inflows.

  • Two-wheeler producers Hero MotoCorp Ltd. and Bajaj Auto Ltd. were among the biggest decliners on the Sensex. 

  • Castrol India Ltd. surged 9.4 percent, the most since May 2011, after 8.5 percent of its equity changed hands in block deals.

  • Jubilant Foodworks Ltd. tumbled 6.2 percent to its lowest level since June 2013 after Chief Executive Officer Ajay Kaul resigned. 

  • Monsanto India Ltd. capped a four-day, 7 percent decline. The losses come after the stock jumped to a two-month high last week. Bayer Aktiengesellschaft has offered to buy up to 4.49 million shares of the company at 2,481.60 rupees each, according to a filing after market hours. The price is about 4 percent higher than Tuesday’s close.

  • Sharon Bio-Medicine Ltd. jumped 20 percent after the company said it got U.S. FDA approval for its plant in Taloja, a Mumbai suburb.

The Sensex is valued at 16.4 times projected 12-month earnings compared with 12.4 times for the MSCI Emerging Markets Index. The valuation is near the most expensive level since January 2011 reached earlier this month.

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