India’s Sensex Holds Gains at Seven-Month High as L&T Advances

  • Gauge 14-day RSI rises to 71, signaling gains may be capped
  • Foreign investors remain net buyers for nine straight days

Indian stocks held gains at a seven-month high as engineering companies and automakers countered declines in software exporters.

Larsen & Toubro Ltd. and Bharat Heavy Electricals Ltd., the nation’s biggest capital goods companies, were the top performers on the S&P BSE Sensex. Hero MotoCorp Ltd. rallied to to its highest since December 2014, while ICICI Bank Ltd. paced gains among its peers. Infosys Ltd. slid for a third day.

The Sensex closed little changed in Mumbai, after swinging between gains and losses at least 12 times. The gauge rallied to its highest level since October on Tuesday after the central bank said it remains willing to cut rates as long as conditions allow, and as odds of a rate increase by the Federal Reserve this month decreased.

“The market’s run has been superb and hence we are seeing a consolidation at current levels," R. K. Gupta, managing director of Taurus Asset Management Co., which has $590 million, said from New Delhi. “The markets are in a pause mode and waiting for the U.S. Fed’s meeting next week and the monsoon’s progress."

India’s monsoon, which accounts for four-fifths of the rainfall, reached the mainland n southern Kerala state on Wednesday. The country is counting on above-normal rainfall this year to help control food prices, boost farm production and ease a drinking water shortage caused by back-to-back droughts.

Global Events

Global investors are focused on central-bank and political events this month: the Fed announces its rate decision on June 15, a referendum on June 23 will determine Britain’s membership in the European Union and Spain’s general election is due three days after that. Traders have cut back their bets for a Fed rate increase, now pricing in almost no chance of a boost in June, with odds for July down to 18 percent from 53 a week ago.

Overseas funds have poured a net $471 million into local shares this month, exceeding $386 million of purchases made in May. That’s helped the Sensex climb 1.3 percent since June 1 after rallying 16 percent in the last three months. The rally has sent the gauge’s 14-day relative strength index to 71, a level some investors see as a signal that further gains may be capped.

Larsen & Toubro climbed to its highest level since Oct. 21 and Bharat Heavy advanced 1.8 percent to pare the year’s loss to 28 percent. Hero MotoCorp increased 1.3 percent. Bharti Airtel Ltd. rose 1 percent after report the government may cut spectrum usage changes. ICICI Bank rose 1.4 percent, adding to Tuesday’s 4.4 percent rally.

Infosys retreated 1.5 percent, the worst performer on the Sensex, and HDFC Bank Ltd. slid 1 percent, the most since May 18. Asian Paints Ltd. slid 1.2 percent. Adani Ports & Special Economic Zone Ltd. retreated 1 percent.

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