Indian Stocks Rebound From Six-Month Low as Drop Seen Overdone

  • Tata Motors, Maruti Suzuki, Hindustan Unilever lead gains
  • Nifty reclaims crucial 8,000 mark even as global funds sell

Indian stocks rebounded from the biggest losing streak in a year as some investors deemed the benchmark gauge’s decline to a six-month low to be excessive.

Tata Motors Ltd., owner of Jaguar Land Rover, Bajaj Auto Ltd. and Maruti Suzuki India Ltd. climbed from four-month lows. National Aluminium Co. and Hindalco Industries Ltd., India’s top producers of the light metal, surged at least 6 percent. A gauge of metal shares fell to a two-month low on Monday as concerns about the economic impact of the government’s anti-corruption steps and capital outflows from local assets sparked a selloff in Indian equities.

IndexChangeSize and Scope
BSE Sensex0.8%Rebounds from 6-month low
NSE Nifty 500.9%First advance in four days
BSE Metal2.7%Biggest jump since Nov. 10

The Sensex has erased this year’s gains after retreating 6 percent since the government’s Nov. 8 decision to scrap 86 percent of the currency notes in circulation. There’s concern the cash crunch arising out of the move will cool demand at a time when a good monsoon after back-to-back droughts had led investors to bet on company profit growth accelerating. The currency recall will pull down economic expansion for the year to March by 0.5 percentage points, Citigroup Inc. said in a report on the weekend.

“The best time to build portfolios is when there’s fear as the concentrated selling is in shock rather than based on ground realities,” Sanjiv Bhasin, executive vice president at Mumbai-based brokerage India Infoline Ltd., said by phone. “The double whammy of the unexpected Trump victory and demonetization in India has played havoc with sentiment.”

The anti-corruption measures have combined with capital outflows from emerging markets in the wake of Donald Trump’s surprise U.S. election victory. Global funds have withdrawn $1.6 billion from local shares this month, the highest in Asia after Taiwan, data compiled by Bloomberg show. Domestic institutional investors have bought a net $1.7 billion of shares so far this month, the data show.

The Sensex trades at 15.1 times projected 12-month earnings, near the cheapest level since May. The MSCI Emerging Markets Index is valued at a multiple of 12.

  • Oil & Natural Gas Corp., the largest explorer, capped a fourth day of gain, the longest in two months. Crude prices have risen for three days amid signs OPEC members have made progress toward finalizing a deal to cut output
  • Escorts Ltd., a tractor producer, rose 3 percent after saying it expects to expand profit margins for agri-machinery business to 13% to 15%. The stock fell to a three-month low on Monday.
  • IRB Infrastructure Developer declined 3.8 percent after second-quarter profit and revenue missed estimates.
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