Russia Stocks Pare Weekly Decline as Cheapest Equities Oversold

Russian stocks rose for the first time in seven days, paring their weekly decline, as crude gained and a technical indicator signaled the index is oversold.

The Micex Index added 0.2 percent to 1,338.43 by the close in Moscow, cutting its fifth weekly drop to 3.4 percent. Russian equities have the cheapest valuations on an estimated price basis among 21 emerging markets tracked by Bloomberg.

The Micex’s 14-day relative strength index was at 22. A value below 30 signals the gauge is oversold and may be due for a rebound. Crude, Russia’s chief export, traded up 0.3 percent at $88.01 per barrel in New York. The Micex climbed as much as 0.8 percent earlier.

“Russia is oversold,” Sergey Fundobny, head of research at Arbat Capital in Moscow, said by phone today. “We’re not seeing active buying, this is more about fixing profits. There’s concern about the commodities prices coming under pressure. Investors are fleeing riskier assets.”

Oil producer OAO Bashneft’s preferred shares rose 4.1 percent to 1,260.70 rubles, while OAO Surgutneftegas increased 2.9 percent to 27.73 rubles. OAO Mechel, Russia’s biggest coking coal producer, slumped 2.3 percent to 117.10 rubles, the lowest since February 2009. Power stocks led declines on the index, losing 2.7 percent on average. OAO MRSK Holding dropped 5.8 percent to 1.067 rubles, the weakest price since April 2009. Federal Grid Co. retreated 4.9 percent to 10.02 kopeks.

Volumes, Volatility

Russian equity funds posted outflows of $218 million in the week ended April 17, VTB Capital said in an e-mailed note, citing EPFR Global data.

The S&P GSCI Spot Index of commodities was up 0.1 percent to 606.59, paring its weekly slide to 2.6 percent. The dollar-denominated RTS Index advanced 0.7 percent to 1,336.46.

The Russian Depositary Index added 0.6 percent to 1,545.90. Surgutneftegas depositary receipts rose 4 percent to $8.745.

The amount of shares traded on the Micex was 25 percent below the 10-day average, while 10-day price swings on the index rose to 16.269.

The gauge trades at 5 times estimated earnings and has lost 9.2 percent this year, compared with 10.2 times for the MSCI Emerging Markets Index, which has slid 4.4 percent in the period.

The RTS Volatility Index, which measures expected swings in stock futures, tumbled 4.7 percent to 23.35 today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 0.2 percent to 25.75 today, while the Bloomberg Russia-US Equity Index declined 0.6 percent to 89.90.