Photographer: DHIRAJ SINGH/Bloomberg

Indian Shares Cap Best Week in Eight Months on Overseas Inflows

  • Benchmark Sensex index caps biggest weekly gain since May 2016
  • Overseas investors bought shares for five of the past six days

India’s benchmark Sensex completed its steepest weekly advance in eight months as overseas investors boosted purchases of local shares. Lenders and power companies paced the rally.

ICICI Bank Ltd. and NTPC Ltd. rose at least 3.6 percent, pacing gains in the benchmark gauge. The Sensex rose 0.6 percent on Friday, taking its weekly advance to 3.4 percent, the most since May 2016. Eleven of the 13 sector indexes compiled by BSE Ltd. advanced, led by the S&P BSE Power index.

“The return of foreign flows is cheering the markets as local funds, which supported the stocks when overseas investors sold, continue to buy,” said Hemen Kapadia, a Mumbai-based senior vice-president for institutional equities at K.R. Choksey Shares & Securities Pvt. This trend will continue for “some time,” he said.

Overseas investors bought $101 million of local shares in the five days through Jan. 20, the first purchase for the period in six weeks. They pulled out nearly $4 billion in the last two months amid a selloff in emerging markets after the U.S. presidential election and concern that India’s decision to scrap 86 percent of its currency bills would slow economic growth.

India’s federal budget presentation on Feb. 1 will be “a major event” and will decide the direction of the flows for the year, according to Kapadia. Local funds purchased nearly 230 billion rupees ($3.4 billion) of stocks in the last two months, according to data compiled by Bloomberg.

Read Bloomberg Intelligence’s INDIA INSIGHT: Modi Budgets More Capex, Less Interest, Subsidies

The Sensex has held its 200-day moving average after breaking above the level on Jan. 10. The gauge rallied more than 13 percent in four months the last time it broke and held above its 200-day mean in May 2016.

Summary

  • Sensex +0.9% at 27,954.57 at 2:18 p.m. in Mumbai
  • IDFC Bank (IDFCBK) drops as much as 5.5% after 3Q net income missed estimates
  • IIFL Holdings (IIFL) jumps as much as 11%, most in 3 months, after 3Q profit +41% y/y
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