Indian Stocks Climb to Highest in a Month as Metal Shares Rally

  • Commodities will have another good year, HDFC Securities Says
  • S&P BSE Metal index rises to highest level in nearly a month

Indian shares rose for the first time in three days, led by metal producers and auto companies, sending the benchmark Sensex close to its 200-day moving average.

Adani Ports & Special Economic Zone Ltd. rose 3.2 percent, the most on Sensex, after it said earlier Tuesday that it will issue U.S. dollar bonds. Tata Motors Ltd. also gained 3.2 percent, a day after reporting that December sales at unit Jaguar Land Rover climbed 12 percent from a year earlier.

The rally on Tuesday extended to small- and mid-cap shares as local funds have canceled out a sustained selling of Indian shares by overseas investors in the past few months. The S&P BSE MidCap index closed at a one-month high and the S&P BSE SmallCap index rose to the highest in two months.

The last time the Sensex decisively cleared the 200-day average level was in May 2016 and it went on to rally about 12 percent over the next four months.

“Indian equities will continue to be range-bound at least till the federal budget from where the investors expect to take some cues for the rest of the year,” said Deepak Jasani, head of retail research at Mumbai-based HDFC Securities Ltd. The equities will give double-digit returns in 2017 and “resource shares” will have another good year, he said.

The S&P BSE Metal Index, a gauge of 10 producers, rallied 1.3 percent to highest in about a month. It surged 37 percent in 2016, the steepest gain among the 13 sector gauges compiled by BSE. The S&P BSE Oil & Gas index followed with a 27 percent jump.

Metal producers and oil and gas explorers will gain from the expected revival in demand for resources from the U.S. and China, HDFC Securities’ Jasani said.

Foreign investors have sold $286 million of local shares in January so far, following a total outflow of $3.9 billion in the past two months.

That compares with local funds’ 17.2 billion rupees ($252 million) of share purchases so far in January after a total investment of nearly 230 billion rupees in the past two months.

Summary

  • Bharat Electronics Ltd. (BHE) advanced 4 percent to a record close. The company said it will consider stock split on Jan. 27. Credit Suisse earlier Tuesday began its coverage on the shares with an outperform recommendation and a 12-month target of 1,800 rupees.
  • ABB India Ltd. (ABB) surged 13 percent, the steepest gain in more than 11 months, after its parent got a $640-million project from Power Grid Corp.
  • Max Ventures & Industries Ltd. (MVIL) jumped 9.9 percent after it said on Monday that it will sell a 22.5 percent stake to a New York Life Insurance Co. unit.
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