India’s Sensex Climbs for Third Day on Foreign Flows; HDFC GainsRajhkumar K Shaaw and Shikhar Balwani
India’s benchmark stock index climbed from a three-month high amid optimism monetary easing by global central banks will boost inflows to emerging markets.
The S&P BSE Sensex gained 0.5 percent to 19,990.18 at the close in Mumbai, with the gauge climbing above 20,000 for the first time since Jan. 31 in intraday trading. Volumes were 31 percent less than the 30-day average. Mortgage provider Housing Development Finance Corp. jumped 3.7 percent to a record after profit beat estimates. Consumer companies Hindustan Unilever Ltd. and ITC Ltd. closed at all-time highs.
The Reserve Bank of India cut borrowing costs on May 3, a day after the European Central Bank trimmed rates to a record low. The U.S. Federal Reserve pledged to continue its bond-buying program and Australia yesterday pared its benchmark rate. The easing has boosted flows to riskier assets, with foreigners buying a net $12.2 billion of Indian shares this year, a record for the period, data compiled by Bloomberg show.
“The easy global liquidity scenario is helping Indian stocks,” Ravi Gopalakrishnan, head of equities at Mumbai-based Canara Robeco Asset Management Co., which has $1.7 billion in assets, said by phone today. “The market is discounting the negatives and the quarterly earnings season, at least the initial part of it, has been pretty good.”
Profit at just two of the 13 Sensex companies that have reported March-quarter earnings so far has trailed analysts’ estimates, data compiled by Bloomberg show. That compares with 43 percent in the three months ended Dec. 31 and 40 percent in the previous two quarters.
Housing Development Finance jumped 3.7 percent to 885 rupees, a record close. The lender today said fourth-quarter profit rose 17 percent to 15.6 billion rupees, beating the 15.2 billion rupees estimated in a Bloomberg survey.
Hindustan Unilever, India’s biggest home-products maker, gained 1.3 percent to 587 rupees and cigarette maker ITC rose 2.2 percent to 342.8 rupees. HDFC Bank Ltd., the nation’s most valuable lender, added 1.3 percent to 697.15 rupees.
The Sensex has rebounded 9.7 percent since plunging to a seven-month low on April 9, as overseas investors stepped up equity purchases amid optimism the RBI would cut interest rates and a decline in gold and oil prices improved the government’s prospects of narrowing a record current-account deficit. Brent crude fell 7 percent last month and gold dropped 7.8 percent, data compiled by Bloomberg show. The two commodities comprise 43 percent of the nation’s imports, Yes Bank Ltd. estimates.
World stocks have rallied this year on optimism global central banks will maintain monetary support to buoy growth. Standard & Poor’s 500 Index rose to its fourth straight record close yesterday and the Dow Jones Industrial Average closed above 15,000 for the first time. U.S. stocks are in the fifth year of a bull market amid three rounds of bond purchases by the Fed. The MSCI Asia Pacific Index and Stoxx Europe 600 Index are trading at their highest levels in five years.
“Global liquidity and the fact that most developed markets are at an all-time high is boosting local sentiments,” Jagannadham Thunuguntla, chief strategist at New Delhi-based SMC Global Securities Ltd., said by phone. “Indian markets have become almost immune to the local factors.”
Overseas funds bought a net $802 million of local shares last week, the most since the period ended Feb. 8. They bought a net $202 million of stock yesterday, the data show.
The Sensex has advanced 2.9 percent in 2013 and trades at 13.8 times projected 12-month profits, compared with a multiple of 10.6 times for the MSCI Emerging Markets Index.
The 50-stock CNX Nifty Index rose 0.4 percent to 6,069.30, its highest close since January 28. Its May futures settled at 6,075.2. India VIX, which measures the cost of protection against losses in Nifty, increased 1.6 percent to 16.76.