Indian Stocks Advance in Volatile Trade Before U.S. Elections

Updated on
  • Polls show Clinton with small lead with election due Nov. 8
  • Tata Motors rallies on Credit Suisse report; drugmakers tumble

What the U.S. Election Means for Emerging Markets

Indian stocks gained for a second day in a volatile trade with opinion polls showing Hillary Clinton ahead of Donald Trump as Americans prepare to vote in the presidential election.

Industrial companies and banks countered declines in drugmakers, with the gains helping the benchmark index close in the green after changing direction at least 12 times.

Tata Motors Ltd. was the top performer on the S&P BSE Sensex after Credit Suisse Group AG wrote the owner of Jaguar Land Rover stands to gain from a weak British pound. ICICI Bank Ltd. reached a two-week high after reporting profit that surpassed estimates. Better-than-estimated earnings pushed Bharat Heavy Electricals Ltd., a maker of boilers and turbines, to a five-week high.

IndexChangeSize and Scope
BSE Sensex+0.5%One-week high
NSE Nifty 50+0.6%Second day of advance
India VIX+1.6%Highest since Nov. 4
S&P BSE Healthcare+1.2%Lowest since Nov. 4

A Bloomberg Politics national poll put Clinton ahead of Donald Trump by three percentage points, boosting investors’ confidence in risk assets globally. The poll was conducted before an FBI statement saying her handling of e-mails wasn’t a crime. Global equities slumped last week and haven assets rallied after the FBI said Oct. 28 that it had reopened a probe into Clinton’s communications, potentially damaging her election chances. The results are due to be announced during morning trading in Asia on Wednesday.

“The election is a close call but the market loves Hillary; it’s a big event,” said Vijay Chopra, managing director of New Delhi-based Enoch Ventures Pvt. “Some investors who had gone excessively short are hedging their positions to ensure they don’t lose on the one side in case there’s any wild moves.” Indian stocks could rally about 5 percent if Clinton wins and decline by as much if Trump becomes President, Chopra said.

Domestic investors are also looking at company earnings for signs of economic expansion filtering through to company bottom lines. So far, 21 of the 32 Nifty companies that have reported results have beaten estimates, data compiled by Bloomberg show.

Foreigners have bought $7 million of Indian stocks this month, after pulling $746 million in October that was the first selloff in eight months. Local mutual funds have bought shares worth $251 million, extending October’s net purchases of $1.2 billion, data compiled by Bloomberg show.

The Sensex has climbed 5.6 percent this year and trades at 16.4 times projected 12-month earnings, compared with a five-year average of 14.4 times.

  • ICICI Bank Ltd. rose to a two-week high. The lender’s net income exceeded estimates after the listing of its life-insurance unit -- India’s biggest initial public offering in six years -- helped the bank offset higher bad-loan provisions in the September quarter and post a record profit.

  • Varun Beverages Ltd., a PepsiCo franchise, rose 3.3 percent in its trading debut.

  • Mindtree Ltd. rose the most since Aug. 1 after 2.18 percent of its shares changed hands. Names of the buyers and sellers were not immediately known.

  • New Delhi Television Ltd. added 1.6 percent after the government put on hold its one-day broadcast ban.

  • Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, lost 3 percent, while Cipla Ltd. decreased 1.9 percent. A gauge of health-care companies dropped 1.2 percent, extending last week’s 8 percent tumble, on concern a win by Clinton may pave the way for tighter pricing rules for Indian drugmakers, Kotak Institutional Equities said in a report dated Nov. 7.

  • Bharat Heavy Electricals climbed 3 percent after reporting profit of 1.09 billion rupees in the September quarter compared with an estimate of 593 million rupees.

  • Ceat Ltd. jumped 7.3 percent after its second quarter net income and revenue beat estimates.