India’s Sensex Retreats From Record After Eight Days of Gains
India’s Sensex Retreats From Record After Eight Days of Gains
(Bloomberg) -- India’s benchmark equity gauges retreated from new record highs set in the past three days, snapping their longest winning streak in a month.
The S&P BSE Sensex declined 0.5% to 43,357.19 in Mumbai, slipping from Wednesday’s peak, while the NSE Nifty 50 Index fell by a similar magnitude. Both gauges this week breached a technical indicator that signals gains may be overdone.
Today’s pullback comes after the central bank warned economic risks remain even as prospects brightened in October. While income at most of India’s largest companies rebounded last quarter from the worst decline in at least a decade, cost-cuts shored up operating profits and sales dipped from a year earlier. Grasim Industries Ltd. and Eicher Motors Ltd. are scheduled to report earnings later today.
The government on Thursday announced additional stimulus steps to provide relief to companies impacted by the sudden lockdown in March to stem the spread of coronavirus. The new measures amount to about 9 trillion rupees ($120 billion), taking the nation’s total virus relief to almost 30 trillion rupees, or 15% of gross domestic product, Finance Minister Nirmala Sitharaman told reporters in New Delhi.
The new measures include credit-guarantee plan for small businesses, production-linked incentives and more money toward affordable urban housing program.
“The measures are long-term positive for both the economy and equity market,” Sujan Hajra, executive director at Anand Rathi Shares & Stock Brokers, said in a note. “Low allocation from budgetary resources makes the announcements positive for the government securities market as well.”
As regulators remained cautious, Goldman Sachs turned bullish on India on hopes of a rebound in corporate earnings and economic growth picking up pace after the lockdown curbs were eased across the country.
Read: Goldman Sachs Upgrades India As Economic Activity Gains Pace, Raises Nifty Targeted
Still, a report later today may show consumer-price increases exceed the top of the central bank’s 6% target range, limiting its scope to cut borrowing costs. India also remains host to the world’s second-largest number of coronavirus infections, although new daily cases are less than half of the peak in mid-September, according to data compiled by Johns Hopkins University.
The rupee weakened 0.4% to 74.6463 per U.S. dollar, while the yield on 10-year government bonds was little changed at 5.91%.
The Numbers
- Eleven of 19 sector indexes compiled by BSE Ltd. rose, led by a gauge of consumer-goods companies
- HDFC Bank Ltd. contributed the most to the Sensex decline, falling 1.3%, while State Bank of India Ltd. had the largest drop, down 3.2%
- Hindustan Unilever Ltd. had the largest gain, advancing 2.9%
Market-related stories
- India Inc.’s Default Risk Plunges on Improving Economy: Chart
- Blackstone Said Poised to Buy Piramal Glass for $1 Billion
- Rupee May Return Near Pre-Covid Levels by March, Nomura Says
©2020 Bloomberg L.P.