Indian Stocks Advance as Tata Motors Rallies Amid Brexit Voteby
Jump in European stocks, U.S. futures spurs short-covering
Foreign funds have been net sellers in four of last seven days
Indian stocks rose for the first time in three days amid gains in Europe equities and U.S. equity-index futures as Britons began voting on whether to remain or leave the European Union.
Tata Motors Ltd., owner of Jaguar Land Rover that gets about a quarter of its revenue from Europe, was the top gainer on the S&P BSE Sensex. Sun Pharmaceutical Industries Ltd. and Dr. Reddy’s Laboratories Ltd. both advanced for a second day. State Bank of India and HDFC Bank Ltd. paced gains among lenders. ITC Ltd. rallied to a two-week high.
The Sensex rose 0.9 percent at the close in Mumbai, with the gauge erasing an intraday loss of 0.1 percent after European markets opened. The Stoxx Europe 600 Index jumped 1.8 percent and Britain’s benchmark FTSE 100 Index advanced 1.6 percent. The India VIX Index, a measure of protection against stock-market swings, erased aarlier gain of as much as 3.5 percent.
“It is clear that people who had gone short or bought protection are being forced to square up after seeing gains in Europe and the outpouring of appeals by leaders to Britons to stay in Europe,” Deven Choksey, managing director of K.R. Choksey Shares & Securities Ltd., said in a phone interview. “I expect to see a sharp rally tomorrow.”
The referendum’s outcome is being watched around the world after warnings by the U.K. Treasury, the International Monetary Fund and others that a Brexit risked jobs, incomes, a plunge in the pound and damage to the U.K. economy. That’s a prospect that threatens to roil global markets and buttress anti-establishment movements in other EU members.
Concerns about the so-called Brexit have whipsawed stock markets this month, wiping more than $1 trillion from global equity values last week alone. Polls conducted before the referendum signaled the decision was too close to call. The Reserve Bank of India said Wednesday it would take steps including providing liquidity support to ensure orderly conditions in the markets, while the National and the Bombay stock exchanges said they are geared to handle any increase in volumes on Friday.
The Sensex has risen 18 percent since falling into a bear market in February as forecasts for the strongest monsoon rain in two decades and India’s world-beating economic growth lured $2.8 billion in inflows from abroad this year. Rains progressed further into parts of the nation’s key states of Maharashtra, Madhya Pradesh, Uttarakhand and Uttar Pradesh, shrinking the deficit since June 1 to 21 percent from 23 percent.
Tata Motors jumped 3.2 percent to its highest level since May 26. Sun Pharma gained 1.7 percent, while Dr Reddy’s jumped 2.1 percent. State Bank rallied 2.2 percent to its highest level since Jan. 5. HDFC Bank climbed 1.6 percent to a record. ITC rose 1.6 percent.
Overseas funds have bought $628 million of shares in June, set for the fourth month of purchases, data compiled by Bloomberg show.