Indian Stocks Climb for Second Day as HDFC Bank Jumps to Record

  • Foreigners buy $847m of shares in July, surpass June’s $771m
  • Refiners Indian Oil, BPCL; Bajaj, Hero climb to all-time highs

Indian stocks rose for a second day, sending at least four companies in the benchmark gauge to a record close, as overseas investors extended their purchases of local shares amid gains in global equities.

Coal India Ltd., the world’s biggest miner of the fuel, was the top gainer on the S&P BSE Sensex. HDFC Bank Ltd., the most valuable lender, climbed to a record before its quarterly earnings Thursday. Power Grid Corp. and motorcycle makers Hero MotoCorp Ltd. and Bajaj Auto Ltd. rallied to all-time highs. Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp., the nation’s largest refiners, also increased to records.

Foreigners have bought $847 million of stocks since July 1, adding to four straight months of inflows that have lifted the Sensex 22 percent from a low in February amid strong rain after back-to-back droughts and signs of recovery in company earnings. Global equities added more than $4.5 trillion in value in the past three weeks amid expectations policy makers will step up stimulus to stem the economic fallout arising from the U.K. shock decision to leave the European Union.

“One has to see how global growth pans out, but the domestic side is where things are looking better,” Mahesh Patil, co-chief investment officer at Mumbai-based Birla Sunlife Asset Management Co., which has $22 billion in assets, said in an interview to Bloomberg TV India. “The monsoon’s impact will be felt in the second half, while demand in core sectors like cement and oil has been looking better for the past few months.”

Rainfall in the June-September monsoon season, which accounts for more than 70 percent of India’s annual showers, was 2 percent above normal as of Tuesday. Fuel demand rose 11 percent in the year ended March, the fastest pace since at least fiscal 2001, while air travel expanded 23 percent in the first five months of this year, official data show.

Net Buyers

Overseas funds bought $106 million of shares on Tuesday, an eighth day of net purchases. The inflows have pushed the Sensex’s valuation to a 16-month high, leaving share prices with little room to climb further if more companies report earnings that miss estimates. The gauge fell Friday and Monday after Infosys Ltd., the second-biggest software maker, and Hindustan Unilever Ltd., the largest consumer products company, posted earnings that disappointed investors.

Wipro Ltd., the third-biggest software maker, dropped for a fifth day after its first-quarter profit and revenue missed forecasts. Earnings came after trading ended Tuesday. HDFC Bank Ltd., ITC Ltd. and Bajaj Auto Ltd. are due to announce results this week.

“Despite the multiples being high, there’s still some steam left in the rally going by the inflows,” Abhimanyu Sofat, founder of AdviseSure Ventures Pvt. in Mumbai, said by phone. “We have a cyclical upturn and a good monsoon has added to the cheer by reducing the fear of food inflation flaring up.” He is advising clients to buy shares of infrastructure finance, road builders and energy companies.

Sun Pharmaceutical Industries Ltd., Dr. Reddy’s Laboratories Ltd. and Cipla Ltd., India’s biggest drugmakers, were among the top performers on the Sensex. Wockhardt Ltd., a maker of generic medicines, surged 12.5 percent, the most since September 2014. The stock was the second-best performer on a gauge of drugmakers, helping it rally to its highest level in six months.

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