Indian Stocks Rally Most in Five Months as Global Equities Climb

  • ICICI Bank extends gain; metal makers halt three-day retreat
  • Fed moves, presidential election short-term triggers: Enoch

Indian stocks rebounded from a three-month low, with the benchmark index rallying the most in Asia, as a spurt in global equities lifted investor sentiment.

A gauge of lenders climbed the most among the nation’s 14 sector indexes, while an index of metalmakers ended three days of losses. A measure of mid-sized stocks rose to within a whisker of its life-time high set two weeks ago.

Stocks rallied around the world, pulled higher by commodities, on speculation that the U.S. Federal Reserve will look past a pick-up in the global inflation and stick with a gradual tightening of monetary policy. The MSCI All Country World Index of equities headed for its biggest gain in almost four weeks.

IndexChangeSize and scope
BSE Sensex+1.9%Most in five months
NSE Nifty 50+1.9%Most since May 25
S&P BSE MidCap+1.9%Most in two weeks
S&P BSE Cap Goods+2.1%2nd advance in 3 days

“The Fed decision, U.S. presidential elections and the health of European banks are the short-term triggers, and our daily movement will be dictated by how global markets do,” said Vijay Chopra, managing director of New Delhi-based Enoch Ventures Pvt. Chopra said he’s bullish on shares of financial-services companies, chemical producers and miners. 

Investors’ appetite for risk has diminished in recent days with futures indicating a two-thirds probability for U.S. policy tightening by year-end and Republican candidate Donald Trump pledging to renegotiate trade deals if he wins the Nov. 8 presidential elections. Global funds sold $374 million of Indian shares in the past four sessions, the longest streak of withdrawals in more than three weeks as they weighed the prospects of a Fed rate increase and awaited domestic company earnings reports.

Infosys Ltd. and Tata Consultancy Services Ltd., India’s top software exporters, last week reported disappointing earnings outlook. Reliance Industries Ltd., the owner of the world’s largest refining complex, is among companies due to report this week.

‘Not Too Bad’

Earnings growth will accelerate as higher consumer spending, an increase in government investment in infrastructure, lower borrowing costs and timely rains after two years of drought are set to underpin a wide spectrum of sectors, according to SKP Securities Ltd.

“This is just the start of the earnings season and you’re unlikely to a very negative results season," Naresh Pachisia, chief executive officer at SKP Securities Ltd., said by phone from Kolkata. “The September-quarter won’t be too bad, but you will see the change happening from the subsequent quarter onward” as benefits from an improving economy filter through to company profits, he said. Pachisia is bullish on companies linked to consumption, such as automakers, and those tied to farming and infrastructure.

The Sensex trades at 16.5 times projected 12-month earnings, near the 16.7 times in early September, which was the most expensive since January 2011. The MSCI Emerging Markets Index is valued at 12.5 times.

  • ICICI Bank Ltd. capped its steepest two-day, 12 percent advance since March. The stock was the best performer on the Bankex Index, which climbed to a two-week high after a deal by Essar Group to sell its refinery unit for $13 billion improved prospects for loan recoveries in the banking system. 

  • Indian Hume Pipe Co Ltd. rallied to an all-time high after saying it’s considering issue of free shares.  

  • Suven Life Sciences Ltd. climbed the most in two weeks after saying it received two product patents in Europe and Israel. 

  • Max Financial Services Ltd. rose the most in six weeks after 1.36 million shares of the company changed hands in a block deal. The identities of the buyer and seller were not immediately know. 

  • Adani Ports & Special Economic Zone Ltd. was the top gainer on the Sensex with a 6.3 percent rally. Tata Steel Ltd., the biggest producer of the alloy, rose 3.4 percent to its highest level since December 2014.

  • Mastek Ltd. soared 13 percent to its highest level since June 10 after its second-quarter profit nearly tripled.
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