Indian Stocks End Three-Day Decline as ONGC Rebounds With Oilby
Regional equities advance as crude extends gains, dollar falls
Tata Steel rises before earnings report; Larsen, Adani climb
Indian stocks climbed for the first time this week as a rebound in oil prices spurred gains in regional equities.
Larsen & Toubro Ltd., the largest engineering company, rallied to a two-week high. Oil & Natural Gas Corp., the top state-owned explorer, was the best performer on the S&P BSE Sensex. Adani Ports & Special Economic Zone Ltd. surged 2.6 percent. Tata Steel Ltd., the biggest producer of the alloy, ended a five-day, 13 percent retreat before its earnings.
The S&P BSE Sensex advanced 0.5 percent at the close in Mumbai, ending a three-day, 2.6 percent slide. The India VIX Index, a gauge of demand for protection against stock-price swings, fell for the first time this week as global stocks rebounded with oil and optimism grew central banks from Asia to Europe will remain supportive of economic growth.
“It’s quite possible that we have seen the worst of the volatility last month and things should improve," S. Naganath, Mumbai-based chief investment officer at DSP BlackRock Investment Managers Pvt., which manages $5.8 billion, said in an interview on Thursday. “The volatility will begin to subside as global central banks try to contain the negative investor sentiment by providing more liquidity.”
The VIX gauge surged 24 percent in January, the most since August, as Indian equities got off to the worst start of a year since 2011. Foreigners have pulled$1.7 billion from local shares since Jan. 1 on concerns over local growth, after buying $3.3 billion in 2015, the smallest inflow in four years.
The Sensex has declined 6.8 percent this year and trades at 14.8 times its projected 12-month earnings, versus a multiple of 10.9 for the MSCI Emerging Markets Index. Investor focus has turned to the federal budget on Feb. 29 after Reserve Bank of India Governor Raghuram Rajan said he wants to see policies aimed at relieving supply bottlenecks and fiscal consolidation.
“If the budget proposals are pro-growth, which I think they will be, even if it means a slight increase in the fiscal deficit the market won’t be too concerned,” Naganath said. “If there are some incentives for retail investors that encourages them to allot more money toward equities or equity mutual funds that would be very welcome.”
Larsen & Toubro climbed 2.4 percent to its highest level since Jan. 22. Oil & Natural Gas rallied 3.3 percent. The stock slumped to its lowest close since May 2009 on Jan. 21.
Adani Ports pared this year’s loss to 17 percent. Asian Paints Ltd. increased 3 percent. Infosys Ltd., the second-largest software exporter, rose 1.9 percent to near a record.
Tata Steel climbed 0.9 percent, paring this week’s loss to 9.5 percent. The steelmaker will probably announce a group fiscal third-quarter loss of 8.35 billion rupees ($123 million), according to the median estimate of 22 analysts in a Bloomberg survey.
Eight out of the 15 Sensex companies that have posted earnings for the December quarter have beaten estimates, versus 57 percent in the three months ended September and 60 percent in June, data compiled by Bloomberg show.
Overseas investors sold a net $46.5 million of Indian stocks on Feb. 3, taking this year’s outflow to $1.7 billion.