Photographer: Dhiraj Singh/Bloomberg

Indian Stocks Hit 3-Week High as ONGC Rallies on Free Share Plan

  • India in a ‘sweet spot’ and top emerging-market pick: Mobius
  • Equities seen volatile ahead of derivatives expiry on Thursday

Indian stocks rose, extending their steepest weekly gain in almost two months, as energy companies and lenders climbed amid surging foreign inflows.

The S&P BSE Sensex gained 0.4 percent in Mumbai on Monday, extending last week’s 1.5 percent rally. The S&P BSE India Oil & Gas Index rose to its highest level since January 2008, while a gauge of 10 lenders added 0.6 percent after surging 4 percent last week.

IndexChangeSize and scope
BSE Sensex+0.4%Highest since Oct. 5
NSE Nifty 50+0.2%Highest since Oct. 6
S&P BSE MidCap-0.1%Ending four days of climb
S&P BSE India Oil & Gas+1.7%Highest since Jan 2008
S&P BSE Bankex+0.6%One-month high

Foreign investors have been bullish on India amid prospects for higher economic growth and more reforms from Prime Minister Narendra Modi’s administration. Mark Mobius, the executive chairman of Templeton Emerging Markets Group, said on Friday that the South Asian nation is its top pick in emerging markets. Global funds have bought $7.45 billion of local shares this year, the most in Asia after Taiwan and South Korea, data compiled by Bloomberg show.

“The international situation is not getting worse and the global liquidity tap is likely to continue for some more time,” Lancelot D’Cunha, chief executive officer at Crest Wealth Management Pvt., said by phone from Mumbai. “This has forced some investors to cover their short positions. Also, India is in a much better situation compared to its peers."

Asian equities capped their biggest weekly gain in a month last week as data showed Chinese economic growth is stabilizing while investors weighed the outlook for higher U.S. borrowing costs. Federal Reserve Bank of San Francisco President John Williams is the most recent official to comment, saying that slow growth is probably “here to stay” and repeating his support for a gradual increase in rates “sooner rather that later.” The odds the Fed will act by December climbed to 68 percent last week.

Traders and investors roll over their monthly derivatives contracts to the next month on the last Thursday of every month. The Sensex has rallied 23 percent from a February low. The Indian index trades at 16.5 times projected 12-month earnings, compared with a five-year average of 14.4 times. The MSCI Emerging Markets Index is valued at a multiple of 12.6.

  • Oil & Natural Gas Corp., India’s largest state-owned oil explorer, jumped 4.5 percent to its highest level in 15 months after announcing a free share plan. It was the top gainer on the Sensex.

  • ICICI Bank Ltd., the country’s biggest private lender, rose 2.6 percent, extending last week’s 15 percent surge. Goldman Sachs Group Inc. and UBS AG both raised the stock to buy.

  • Wipro Ltd. was the top loser on the Sensex with a 3.1 percent decline after the nation’s third-biggest software services provider “guided for negative to flat revenues" for the next quarter, brokerage Prabhudas Lilladher Pvt. Ltd. wrote in a report. The company’s second-quarter profit and sales beat estimates. 

  • Lakshmi Machine Works Ltd. rallied 4.7 percent to an all-time high after saying its board will consider a proposal to repurchase shares.

  • Mindtree Ltd. tumbled 4.8 percent, the most since July 19, after its second-quarter net income missed estimates.

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