Indian Stocks Little Changed as Investors Await Fed Meeting

Updated on
  • Fed likely to maintain status quo on rates: Bloomberg survey
  • Foreigners buy most Indian equities this quarter since 2015

Indian stocks reversed gains of as much as 0.6 percent to end little changed as investors awaited the outcome of the Federal Reserve’s policy meeting.

Benchmark gauges rose earlier as emerging-market equities advanced after the Bank of Japan indicated it remained committed to the monetary stimulus that’s fueled demand for riskier assets. The gains faded in the last hour of trade, led by lenders and utilities.

Investors are focused on the Fed’s policy meeting for clues on when and how quickly the U.S. will raise borrowing costs, with only 22 percent of traders expecting a move today. All but four of 102 economists surveyed by Bloomberg predict the authority will hold off from raising rates after employers added fewer jobs than forecast in August and growth in services slowed.

SensexLittle changed28,507.42
Nifty 50Little changed8,777.15
S&P BSE MidCap-0.1%13,111.77

“The market is going light ahead of the Fed meeting," said Sanjiv Bhasin, executive vice president for markets at Mumbai-based brokerage India Infoline Ltd. “The BOJ meeting has led to fresh speculation that the yen may weaken. Once yields rise globally, money will get sucked out of other asset classes, including equities.”

Low borrowing costs in the U.S. and other developed countries have supported demand for riskier assets. Global funds have bought $3.6 billion of Indian stocks in the current quarter, the most since the three months ended March 2015 and the highest in Asia after Taiwan and South Korea. The passage of economic reforms, improvement in public finances and timely monsoon rains after two years of drought have lured global funds to Indian assets.

  • India’s biggest initial share sale in six years saw strong demand on its last day. ICICI Prudential Life Insurance Co. got bids for more than 6.5 times the shares worth $904 million on offer. The IPO may have diverted funds away from the secondary market, India Infoline’s Bhasin said.

  • Tata Steel Ltd. was the top gainer on the Sensex, while Power Grid Corp of India Ltd. was the biggest decliner.

  • Essel Propack Ltd. jumped 3.4 percent to a record after a unit bought out its German venture. 

  • Vardhman Textiles Ltd. soared 5.8 percent saying it will consider buying back shares. 

The Sensex is valued at 16.4 times projected 12-month earnings compared with 12.5 times for the MSCI Emerging Markets Index. The valuation is near the most expensive level since January 2011 reached earlier this month.

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