India Sensex Caps Biggest Weekly Gain Since 2011 as Inflows Jump

  • Foreign investors bought $611 million of stocks this week
  • SBI, ICICI lead banking gauge's steepest climb since May 2009

India’s benchmark stock gauge capped its best week in four years as foreign investors increased their holdings and the rupee strengthened.

State Bank of India and ICICI Bank Ltd., the country’s two biggest lenders, were the gauge’s top performers for the week with gains of 21 percent and 19 percent. Tata Motors Ltd., the owner of Jaguar Land Rover, rose to a six-week high. Bharat Heavy Electricals Ltd., India’s largest power-equipment maker, was the top gainer on the S&P BSE Sensex on Friday.

The Sensex climbed 6.4 percent from Feb. 26, the most since the week ended Dec. 2, 2011. It rose 0.2 percent to close at 24,646.48 in Mumbai on Friday, after changing direction at least 20 times. Global funds bought a net $860 million of local stocks in the first three days of March, paring the year’s outflows to $2 billion. The rupee completed its biggest weekly advance since September 2013. Indian markets will be shut Monday for a local holiday.

“After a tear away rally we can see some consolidation, and we have the extended weekend coming up," Paras Bothra, a Mumbai-based vice president of equity research at Ashika Stock Broking Ltd., said in an interview. “The rally was on the back of the fiscal consolidation in the budget and the good news is that global markets are stabilizing and foreign inflows are coming back." He is advising clients to buy shares of consumer-goods companies.

Rupee Gains

A rebound in oil prices, improvements in U.S. economic data and optimism that China will increase stimulus to spur growth have helped revive appetite for emerging-market assets. The rupee has rallied 2.2. percent this week and was up 0.3 percent at 67.14 a dollar as of 4:24 p.m. in Mumbai, according to prices from local banks compiled by Bloomberg.

Finance Minister Arun Jaitley in Monday’s budget affirmed the government’s goal of cutting the fiscal deficit to a nine-year low of 3.5 percent of gross domestic product in the year starting April 1. The administration plans to boost spending on roads, ports, power plants and other public projects, while increasing allocation to a rural jobs program.

Bharat Heavy Electricals surged 4.2 percent on Friday to end the week with a 13 percent gain, its biggest since May 2014. The stock is still this year’s worst performer on the Sensex, having lost 36 percent. Tata Motors jumped 14 percent this week, trimming 2016’s drop to 12 percent. Tata Steel Ltd. climbed 16 percent.

Lenders jumped this week after the central bank eased rules allowing them to bolster capital ratios. State Bank of India increased 3.1 percent in a sixth day of gains Friday to cap its best week since May 2009. ICICI Bank’s 19 percent surge and the S&P BSE India Bank Index’s 12 percent advance also were the biggest since May 2009.

Nifty Options

The NSE Nifty 50 Index added 0.1 percent Friday and 6.5 percent during the week to 7,485.35, its highest close in a month. The Nifty 7,500 calls have the biggest open interest among bullish options, which signals that the index will find it tough to cross that zone, according to Motilal Oswal Securities Ltd.

“Futures and options positions signal that markets could take a pause at these levels,” Rikesh Parikh, vice president at Motilal Oswal in Mumbai., said in a phone interview. “Most investors couldn’t capitalize on the swift upmove and are waiting for fresh cues.”

Despite this week’s rally, the Sensex has lost 5.6 percent this year as global funds dumpedlocal shares amid a selloff in emerging-market assets. The gauge trades at 15.1 times its 12-month projected earnings, compared with 12.7 times for the MSCI AC Asia Pacific Index.

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