Indian Stocks Rebound as Steelmakers Pace Gains Among Mid-Caps

  • Reliance Communications, JSW Steel among biggest gainers
  • European stocks rally from 10-week low, U.S. futures recover

India’s mid-cap stocks rebounded from a two-month low and materials producers helped the benchmark index eke out a gain in volatile trading before the U.S. Federal Reserve’s final meeting of 2015 this week.

Reliance Communications Ltd. surged 6.2 percent, the top gainer on the S&P MidCap Index. JSW Steel Ltd. rallied to a nine-month high and Jindal Steel & Power Ltd. had the biggest advance this month after the government levied an anti-dumping duty on some products Friday evening. Mahindra & Mahindra Ltd. is set to sign an agreement to buy Italian car designer Pininfarina SpA, people familiar with the matter said. Shares of the Indian maker of sport utility vehicle rose 1.8 percent.

The mid-cap gauge rose 0.7 percent at close. The S&P BSE Sensex changed direction at least eight times and moved into positive territory in the last half hour as European stocks rallied from a 10-week and Standard & Poor’s 500 futures pointed to stronger U.S. equities. Indian stocks capped a second week of losses on Friday as global funds pulled about $200 million last week before the Fed’s policy decision and as concerns grew on the passage of a unified sales tax bill in parliament.

“Investors covered their shorts, taking a cue from the global markets before the Fed meeting, ” Rajendra Wadher, a director at PRB Securities Ltd., said in a phone interview. Indian equities may climb higher, supported by improving economic data, such as rising factory output and receding inflation, he said.

India’s wholesale prices fell 1.99 percent in November from a year earlier, less than the median estimate of a 2.47 percent slide. Official data released after Friday’s market close showed factory output in October expanded at the fastest pace in five years. The economy grew 7.4 percent in the three months through September, beating estimates, and is set to outpace a slowing China this year, data showed last month.

Still, global investors have sold $534 million of shares so far this month, adding to last month’s withdrawal of $1.1 billion. That’s reduced this year’s inflows to $2.7 billion, the smallest in four years. The Sensex has fallen 8.5 percent in 2015 and trades at 14.8 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at 10.8.

“I’m surprised that foreigners are selling when India is growing relative to rest of the world and the macro indicators, helped by the collapse in oil, are favorable to us,” Rajeev Thakkar, chief investment officer at Parag Parikh Financial Advisory Services, said in an interview with Bloomberg TV India. “In the U.S., rates will be close to zero even after the Fed raises it by 25 basis points. I would expect money to flow into India, rather than out, in 2016. You can’t paint all emerging markets with the same brush.”

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