India Stocks Gain as Investors Seek Safety in Consumer Companiesby
Small- and mid-cap companies outperform bigger counterparts
Tata Motors, Wipro among worst performers on Europe link
Indian stocks advanced as investors bought companies most-tied to the economy after the U.K.’s decision to leave the European Union left global markets in disarray.
Drugmaker Lupin Ltd. surged the most in three months, while Bharti Airtel Ltd. rallied the most in a week. Hindustan Unilever Ltd. had the steepest advance since March 21 and ITC Ltd., the largest tobacco company, climbed to a one-month high. Tata Motors Ltd., Tata Consultancy Services Ltd. and Wipro Ltd., which get about a quarter of their sales from Europe, were the worst performers on the S&P BSE Sensex.
About $3.6 trillion has been wiped from the value of global shares since the day of the vote last Thursday. In India, an index of smaller companies climbed to its highest level since January as investors snapped up companies that gain the most from Prime Minister Narendra Modi’s growth-boosting policies and have no business links with Europe. The Sensex climbed 0.5 percent at the close.
“India could be a relatively safer haven,” Arvind Sanger, managing partner at Geosphere Capital Management LLC., told Bloomberg TV India. “India remains one of the few bright spots in the world with everybody else being in trouble, and you have a government that is singing the right notes. Money will come in slowly.”
Gains in Indian equities came amid a rebound in global markets, with European stocks, the pound and commodities all climbing for the first time since Britain’s shock vote to exit the European Union amid speculation policy makers will take steps to limit any economic fallout.
Investors are now looking to central banks for support, with Fed Funds futures indicating there is a 20 percent chance the Federal Reserve will cut interest rates by February and a 9 percent likelihood of an increase. Prior to the U.K. referendum, there was zero prospect of a reduction and a 52 percent probability of an increase.
Lupin jumped 4.4 percent, the best performance on the Sensex. Bharti Airtel increased 1.7 percent, ending two days of declines. Larsen & Toubro Ltd., the most valuable engineering company, rose for a second day.
Hindustan Unilever climbed 3.4 percent, while ITC advanced 2.7 percent. The companies have a combined 11 percent weighting in the Sensex.
Tata Communications Ltd. climbed to a one-month high. The telecom services provider is planning to sell a majority stake in South African Internet-service provider Neotel Pty Ltd. to closely held telecommunications company Econet Wireless Global, according to people familiar with the matter.
Overseas funds sold $85 million of local shares on June 24. Global investors have still invested $572 million in Indian equities in June, set for the fourth month of purchases, data compiled by Bloomberg show.