India’s Sensex Rises to a Two-Month High as Metal Makers Shine

  • S&P BSE Metal index rises to highest level since December 2014
  • Tata Steel rises 11 percent on a six-day winning streak

Indian shares advanced, with the benchmark Sensex rising to a two-month high, as metal stocks rallied for a second day.

The gauge broke above its 200-day moving average for the first time in a month, helped by Coal India Ltd., the country’s largest producer, which rose 5.4 percent, the most since February 2016. The company may consider raising prices by 8 to 10 percent this month, television channel CNBC-TV18 reported, citing news agency Cogencis. Tata Steel Ltd. extended a six-day rally to 11 percent, joining other Asian mills, after China was said to have closed eight projects in a top-producing province.

The Sensex is poised to rebound in January from a two-month decline. The past slump came as the nation’s decision to scrap existing high denomination currency bills on Nov. 8 led to concerns about slower economic growth. The gauge retreated 0.1 percent last month, adding to a 4.6 percent drop in November.

“The market is finding reasons to rally and metal stocks have just been providing that for the past few days,” said Deven Choksey, a managing director at Mumbai-based K.R. Choksey Shares & Securities Pvt. This can also be the beginning of a “pre-budget rally” as some investors look to build positions on likely announcements from the federal budget to be presented on Feb. 1, he said.

Read: Modi Flying Blind Into Budget as India’s GDP a Guessing Game

The 10-member S&P BSE India Metal index climbed 4.4 percent to the highest since December 2014, after gaining 1.3 percent Tuesday. The gauge surged 37 percent in 2016, the most among the 13 sector indexes compiled by BSE.

Earnings momentum for Indian metal producers will remain strong in 2017 with a “significant potential stock price upside” in some companies, even from current levels, Anuj Singla, an analyst at Deutsche Equities India Pvt, wrote in an investor note on Wednesday.

The last time the Sensex decisively cleared the 200-day average level was in May and it went on to rally about 13 percent to the 2016 high in September.

Summary

— With assistance by Nupur Acharya

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