India’s Sensex Ends Six-Day Retreat as Metalmakers Advance

  • Stock rallies in U.S., Europe ease global growth concern
  • Investors await earnings, Bihar election verdict for cues

Most Indian stocks advanced, with the benchmark ending the longest losing streak in almost six months, as metal producers and energy companies climbed.

Vedanta Ltd., the biggest copper and zinc producer, rebounded after declining about 10 percent over the last two days. Hindalco Industries Ltd., an aluminum producer, rose the most in three weeks. NTPC Ltd., the largest power generator, climbed to a three-month high, while Oil & Natural Gas Corp. increased for a second day. Tata Motors Ltd. slid the most since Oct. 30. Larsen & Toubro Ltd., the most valuable engineering firm, completed its longest stretch of losses on record.

About nine shares climbed for every seven that fell on the broader S&P BSE 100 Index, which rose 0.2 percent. The S&P BSE Sensex added 0.1 percent to 26,590.59 at the close, after changing direction at least eight times. The benchmark gauge lost 3.3 percent in six days through Monday as results of some of the biggest companies disappointed investors. While 68 percent of Sensex companies that posted results for the September quarter have matched or beaten estimates, versus 60 percent in June, the gauge’s earnings have risen just 2 percent over the previous quarter, data compiled by Bloomberg show.

“This quarter will mark the bottom in terms of the degrowth we have seen in earnings,” Mahesh Patil, co-chief investment officer at Birla Sunlife Asset Management Co., which has $19 billion in assets, said in an interview to Bloomberg TV India. “Growth should look better because of the base effect” from the quarter ending in December, he said. Patil said he’s bullish on companies linked to urban demand as they are likely to benefit more than manufacturers focused on rural consumption from the higher income growth and a fall in borrowing costs.

Bihar Elections

Investors are also awaiting the results of the Bihar state elections, due on Sunday. The polls are important for Prime Minister Narendra Modi’s efforts to control the upper house of parliament, where opposition parties have blocked key economic proposals including a nationwide sales tax. A win would give him momentum in about a dozen more state elections through 2017 that will determine control of the body.

“The market is looking forward to the Bihar election to see if the government is able to consolidate its position so that the pace of reforms accelerates," Patil said.

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Metalmakers Rebound

Vedanta added 1.5 percent, paring this year’s loss to 54 percent. Hindalco increased 1.7 percent to its highest level since Oct. 30. NTPC rallied 2.3 percent, the best performer on the Sensex. Mahindra & Mahindra Ltd., a tractor maker, increased 2 percent.

GAIL India Ltd., the biggest gas supplier, posted a second-quarter profit of 4.41 billion rupees, missing the 5.2 billion rupees estimate. The shares fell 1.1 percent. Earnings were announced after trading ended.

Tata Motors lost 1.5 percent, the most since Oct. 30. Larsen & Toubro slid 1.1 percent in an 11th day of drop, the most since at least 1991. The stock is trading at its lowest level since May 2014.  

Amtek Auto Ltd. jumped 14 percent, paring this year’s loss to 75 percent. The company is looking to sell 25 percent to 40 percent stakes in its units overseas, John Flintham, senior managing director at Amtek, said in an interview with Bloomberg TV India.

Global funds sold a net 68 million rupees of local stocks on Nov. 2, paring this year’s inflow to $4.4 billion.

The Sensex has fallen 3.3 percent this year and trades at 15.5 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.3.

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