Indian Stocks Climb Paring Sensex's First Annual Drop in 4 Years

  • Maruti Suzuki best Sensex performer as Tata Steel, BHEL tumble
  • Foreign fund inflow of $3.2 billion is smallest since 2011

Indian stocks jumped in the last hour of trade, helping the benchmark gauge pare its first annual retreat in four years.

Housing Development Finance Corp., the biggest mortgage lender, rose the most in three weeks. Bharti Airtel Ltd., the largest mobile-phone operator, advanced for a second day this week. Maruti Suzuki India Ltd. extended this year’s advance to 39 percent, the best performance on the S&P BSE Sensex.

The Sensex added 0.6 percent in Mumbai after changing direction at least a dozen times as the December derivatives contracts lapsed. The gauge slid 5 percent this year, after rising 30 percent in 2014, as the euphoria over Prime Minister Narendra Modi’s economic agenda waned and concern grew that tighter U.S. monetary policy will curb the appeal of higher returns offered in emerging markets. Global investors bought $3.2 billion of Indian shares in 2015, the smallest inflow in four years.

“The rout in commodities and the anticipated Fed rate increased led to constant outflows from emerging markets this year,” Vaibhav Sanghavi, managing director at Mumbai-based Ambit Investment Advisors Pvt., said in an interview. “2016 is likely to better as we may see commodities stabilizing with the U.S. and Europe chipping in better growth numbers and China taking measures to boost its economy.” Sanghavi said he’s bullish on consumer discretionary, financial-services and industrial companies.

Sensex’s best and worst performers in 2015

Housing Development Finance surged 2.4 percent, the most since Dec. 10. Bharti Airtel rose 2.2 percent to pare the yearly loss to 3.5 percent. Maruti Suzuki added 0.8 percent to cap its fourth annual increase. The stock surged 89 percent in 2014.

GAIL India Ltd., the largest natural-gas supplier, rallied to its highest level since July 7.

Bharat Heavy Electricals Ltd., the biggest power-equipment maker, and Tata Steel Ltd. were this year’s worst performers on the Sensex, falling at least 35 percent.

Materials companies have seen the steepest losses among 10 industry groups on the MSCI India Index in 2015, sliding 21 percent, as copper producer Vedanta Ltd. lost more than half its value amid sliding metal prices. Health-care companies added 7 percent, the biggest increase on the gauge.

Smaller companies have performed better than those on the Sensex this year, with the S&P BSE Midcap rallying 10 percent and the S&P BSE Smallcap gauge gaining 6.1 percent.

The Nifty 50 Index surged 0.6 percent to 7,946.35 to its highest level since Dec. 1. The gauge fell 4.1 percent in 2015 and Thursday’s advance helped it erase this month’s loss.

“Stocks rallied amid short-covering before the expiry," Abhimanyu Sofat, the Mumbai-based co-founder of AdviseSure Ventures Pvt., an investment advisory firm, said by phone. “Funds also propped up their asset values to show better annual returns."

International investors sold a net $2.7 million of local stocks on Wednesday. The Sensex trades at 15.6 times projected 12-month earnings, compared with a multiple of 10.9 for the MSCI Emerging Markets Index. The Indian gauge retreated 0.1 percent in December, a second straight monthly loss.

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