Indian Stocks Climb as Lenders Advance on Global Equity Rebound

  • Tata Steel biggest gainer on Sensex; State Bank jumps 8.2%
  • Modi move on black money seen boosting bank deposits by $45b

Concern for Emerging Markets Post U.S. Election

Indian equities rose the most in three weeks as global stocks advanced on speculation U.S. president elect Donald Trump will pursue business-friendly policies. Metalmakers, health-care companies and lenders led the increase.

Tata Steel Ltd. and Jindal Steel & Power Ltd. rallied 9 percent each, leading gains on the S&P BSE India Metal Index, which posted its biggest jump since February. An index of drugmakers capped its biggest two-day climb since July. The S&P BSE Bankex rose for a fourth day.

IndexChangeSize and Scope
BSE Sensex+1%Most in three weeks
NSE Nifty 50+1.1%3rd day of gain this week
India VIX-7%Most since Oct. 18
BSE Metal +6%Highest December 2014
S&P BSE MidCap+1.7%Most since Oct. 18

The MSCI Asia Pacific Index rallied the most since March 2. The measure tumbled 3.2 percent on Wednesday, the most since Brexit roiled global markets, after Trump shocked investors by clinching the U.S. presidency. Trump’s unlikely rise to power is providing a shot in the arm for global financial markets, with stocks and commodities rallying on optimism that his fiscal-stimulus plans will boost the global economy.

“Trump’s historic win in both houses bodes well for India’s economic outlook in the medium term," Chakri Lokapriya, Mumbai-based managing director at TCG Advisory Services, which manages about $3 billion, said by phone. “He is expected to cut taxes and spur investments in infrastructure both of which are positive for equities."

The Sensex pared losses of as much as 6.1 percent on Wednesday as investors reassessed the effects of Prime Minister Narendra Modi’s shock anti-graft steps and Trump’s surprise victory. Modi administration’s decision to scrap high-denomination currency notes can add $45 billion to India’s budget, according to brokerages including Edelweiss Securities Ltd.

“The move on black money is a long-term positive, but there could be some hiccups in the near term as the move was very sudden," Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., which has about $6.5 billion in assets, said by phone. “We will buy on declines."

Foreigners have bought $55 million of Indian stocks this month, after pulling $746 million in October that was the first selloff in eight months.

The Sensex has climbed 5.4 percent this year and trades at 16.3 times projected 12-month earnings, compared with a five-year average of 14.5 times.

  • Aluminum producer Hindalco Industries Ltd. rallied 8.4 percent, the most since May 30, after CLSA Asia-Pacific Markets added the stock to its portfolio as U.S. infrastructure spending is seen boosting the company’s profitability.

  • Motherson Sumi Systems Ltd. jumped 5.8 percent, the most since May 17, after second-quarter profit beat estimates.

  • Indian Hotels Co. Ltd. slid 3.8 percent after parent Tata Sons Ltd. sought an extraordinary meeting of shareholders to pass resolution to remove Cyrus Mistry, former chairman of the Tata Group, as a director.

  • State Bank of India soared 8.2 percent, extending Wednesday’s 2.9 percent gain. Indian banks’ earnings may benefit from Modi’s move to scrap high-value currency notes, Bloomberg Intelligence analysts Joseph Jacobelli and Diksha Gera wrote in a report. Punjab National Bank surged 12 percent and Bank of Baroda rallied 9.1 percent.
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