India Stocks Little Changed After Steepest Weekly Gain in 4 Year

  • NMDC, SAIL top performers on metals index; sugar makers rally
  • Foreigners have bought $991m of shares so far this month

Indian stocks closed little changed in volatile trading as some investors judged the benchmark index’s best weekly advance in more than four years as excessive.

Maruti Suzuki India Ltd. and Hindustan Unilever Ltd. slid for a third day. State Bank of India halted a six-day, 24 percent surge. Reliance Industries Ltd., owner of the world’s largest refining complex, rose to a five-week high. NMDC Ltd., the largest iron-ore miner, climbed to a seven-month high after the price of the raw material soared by a record.

The S&P BSE Sensex rose less than 0.1 percent at the close in Mumbai, swinging between a gain and a loss of 0.6 percent during the session. The gauge capped its biggest weekly gain since December 2011 on Friday, as foreigners bought a net $991 million of shares in the first four days of March. The rally sent its 14-day relative strength index to 60, close to the 70 level that signals to some traders a security is overbought. Indian markets were shut Monday for a holiday.

“If you have that kind of returns on the table in a week’s time, it is mouth-watering to take some money off the table,” said Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd. “The rally was ferocious.”

Post-Budget Rally

Shares rallied after Finance Minister Arun Jaitley in his Feb. 29 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.

Maruti Suzuki declined 2.6 percent to its lowest since Feb. 29. Hindustan Unilever fell 2.7 percent, the most since Feb. 23. State Bank slid 2.7 percent. ICICI Bank Ltd. retreated 1.7 percent.

Reliance gained 2.1 percent to its highest level since Feb. 1. NMDC surged 6.1 percent. Steel Authority of India Ltd. soared 8 percent, extending last week’s 15 percent gain. The stock was the top performer on the S&P BSE Metal Index, which rose to its highest level in almost five months. Oil & Natural Gas Corp. increased for a fourth day.

Commodities Rebound

Iron ore became the latest commodity to join the rally, soaring the most ever on Monday after Chinese policy makers signaled their willingness to buttress economic growth. The raw material’s 19 percent jump follows copper’s move back above $5,000 a ton on Friday, while oil has hit a two-month high. Gold is at the highest in a year and platinum has crashed back above $1,000 an ounce.

“The way crude has bounced back is giving investors the hope that the commodities cycle has bottomed out,” Ashish Kukreja, chief executive officer at Mumbai-based Craft Financial Advisors Pvt., said by phone from Mumbai. “The rally last week was on the back of short covering and a good budget. From hereon, the earnings need to catch up."

Investors are looking forward to the March-quarter reporting season to see if economic growth filters through to company earnings. Sixteen of the 30 Sensex companies, or 53 percent, that reported earnings for the December quarter beat estimates. That compares with 57 percent in September and 60 percent in June, data compiled by Bloomberg show.

Sugar Millers Rally

Balrampur Chini Mills Ltd. surged to a five year high, pacing gains among sugar millers amid rising prices. Bannari Amman Sugars Ltd. jumped to the highest level since Nov. 17, while EID Parry India Ltd. extended last week’s 14 percent climb. Shree Renuka Sugars Ltd. rose 2.9 percent, adding to Friday’s 15 percent surge.

Sugar prices at Vashi in Mumbai, India’s biggest market for the commodity, have risen to the highest in almost two years after dry weather last year forced farmers to plant less cane. Sudden estimates output will fall by 2 million tons in 2016-17.

The Sensex has declined 5.6 percent this year and is valued at 15.1 times its 12-month projected earnings.

Before it's here, it's on the Bloomberg Terminal.