Indian Stocks Rebound as Bharti Climbs With European Equities

  • Infosys kicks off March-quarter reporting season Friday
  • Local markets closed Thursday, Friday for public holidays

Indian stocks rebounded from the worst weekly decline in two months, mirroring gains in other emerging markets and European equities, as power utilities and industrials climbed.

Bharti Airtel Ltd., the nation’s top mobile-phone operator, rallied the most in two months after it agreed to buy 4G spectrum from rival Aircel Ltd. Bharat Heavy Electricals Ltd., a maker of power equipment, extended this month’s advance to 12 percent. Adani Ports & Special Economic Zone Ltd. was the top gainer on the S&P BSE Sensex. Tata Consultancy Services Ltd and Infosys Ltd., the largest software exporters, rose before their earnings.

The Sensex jumped 1.4 percent at the close, with the gauge reversing an intraday loss of 0.6 percent after European stocks opened higher. The Shanghai Composite Index climbed from a one-week low as a report showed China’s producer prices increased month-on-month for the first time since September 2013. The MSCI Emerging Markets Index gained 0.6 percent, following a 1.1 percent decline last week.

“Looks like India is benefited from a global risk-on trade as European and other emerging markets rallied,” Lancelot D’Cunha, chief executive officer at Crest Wealth Management Pvt., said by phone from Mumbai. “Today’s advance can be attributed to buying by foreign investors and short covering by local high net worth individuals." He is advising investors to buy shares in auto-part makers, health care companies and software exporters.

Earnings Outlook

Investors are focusing on the March quarter earnings season to see if economic expansion filters through to company earnings. Profit have fallen in four of the last five quarters in the worst run since the global financial crisis. That’s despite the government forecasting the country to expand faster than any other major economy in the year ended March.

Analysts estimate profit expansion of 3.3 percent for the Sensex companies in the March-quarter season, which begins with Infosys on Friday. The company’s shares increased 1.6 percent to end four days of declines. Tata Consultancy, which reports on April 18, added 3.1 percent. The markets are closed Thursday and Friday for public holidays.

“We’re sitting on important events, like the earnings season that will determine the way forward, and the monsoon,” Vijay Chopra, managing director of New Delhi-based Enoch Ventures Pvt., said in an interview with Bloomberg TV India. “The earnings season is likely to be average, not fantastic, but if rains are plentiful as being forecast, the markets could head to 8,000,” he said, forecasting the level for the NSE Nifty 50 Index. The gauge closed at 7,671.4 on Monday.

Monsoon Forecast

Showers during the four-month rainy season starting June will probably be normal as the El Nino weather pattern that parched crops and curbed rural demand after a back-to-back shortfall in rainfall is weakening, farm secretary Shobhana K Patnaik told reporters in New Delhi on Monday.

Bharti Airtel surged 4.1 percent, the most since Feb. 12. Bharat Heavy Electricals rallied 3.8 percent to pare this year’s plunge to 25 percent. Adani Ports gained 4.5 percent, the
most since March 2.

The rupee gained 0.1 percent to 66.43 per dollar. India’s foreign-exchange reserves grew by $4.2 billion in the week to April 1, the most since the period ended May 1, to a record $359.76 billion, as Reserve Bank of India Governor Raghuram Rajan seeks to augment the rupee’s defenses. The reserves surged as the central bank bought dollars to benefit from $4.1 billion of inflows into stocks, the biggest in three years, that unwound some of the outflows in January and February.

The Sensex has fallen 4.2 percent this year and trades at 15.4 times 12-month projected profits versus 11.7 for the MSCI Emerging Markets Index.

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