India Sensex Rises for 2nd Day as Stimulus Bets Lift Asia Shares

  • Tata Steel, Coal India Among Biggest Gainers on Sensex
  • Global funds pull $1.7 billion from local shares this month

Indian stocks capped the biggest two-day rally since October as speculation the world’s biggest central banks will boost stimulus lifted emerging-market equities.

Tata Steel Ltd. climbed to about a three-week high, while Coal India Ltd. had its steepest two-day advance in almost four months, after China pledged to further cut overcapacity in those industries. Sun Pharmaceutical Industries Ltd. rose the most in a month. HDFC Bank Ltd. increased for a third day after reporting earnings that beat estimates.

The S&P BSE Sensex added 0.2 percent at the close after a 2 percent jump on Friday. The gauge pared an intraday gain of 0.9 percent as oil resumed its decline after the biggest two-day rally in more than seven years. The Sensex came within points of entering a bear market Thursday as global funds sold more local assets on concerns over global growth.

“For traders, trying to base a long-term call on the rebound is not prudent as the rally may not be sustainable as we’re too influenced by global factors,” Nitasha Shankar, vice president for equity research at Yes Securities Ltd. in Mumbai, said in an interview with Bloomberg TV India on Monday. “It’s a very good market for investors as any dip makes valuations attractive.”

The Sensex closed below 24,000 level on Thursday for the first time since Prime Minister Narendra Modi’s party swept to power in May 2014, as foreigners pulled $1.7 billion from Indian equities this month. The gauge trades at 14.7 times projected 12-months earnings, near the cheapest since September.

Oil Slides

Growing speculation central banks will cut or avoid raising borrowing costs buoyed Asian markets in the midst of the worst start on record for global stocks. European Central Bank President Mario Draghi signaled Thursday that stimulus programs may be boosted as early as March. Brent oil, which slid as much as 4.5 percent Monday on concerns of oversupply in the market, remains a destabilizing factor.

“We’re dancing to the tune of oil-price movements,” Chokkalingam G., managing director at Equinomics Research & Advisory Pvt. in Mumbai, said in an interview with Bloomberg TV India. “We were up until oil began slipping. Our view is that oil is close to the bottom.” Chokkalingam said he’s bullish on materials shares like Coal India and Hindustan Zinc Ltd.

Earnings Scorecard

HDFC Bank increased 1.1 percent in a third day of gains. The nation’s most valuable lender posted fiscal third-quarter net income of 33.6 billion rupees, beating the 33.5 billion rupees estimate of 31 analysts in a Bloomberg survey.

So far, six of the nine Sensex companies have reported earnings for the December quarter that have exceeded estimates. Fifty-seven percent of Sensex companies in the September quarter posted earnings that matched or beat estimates, versus 60 percent in June, data compiled by Bloomberg show.

The expiration of Indian monthly equity derivative contracts, which is usually preceded by volatility, is due this Thursday. The rollover in January index futures was at 37 percent at 5:25 p.m., data compiled by Bloomberg show.

The benchmark gauge of Indian option costs fell, reflecting waning demand for protection from market swings. The India VIX Index slid 3 percent, paring this month’s increase to 32 percent. The Nifty 50 Index added 0.2 percent to 7,436.15.

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