India Stocks Climb to Three-Month High on Economic Recovery Hope
Still, the Sensex is down about 17% for the year, more than double the drop in the regional MSCI Asia Pacific Index.
(Bloomberg) -- The rally in Indian stocks showed no signs of abating Wednesday as investors continued to bet that easing of the nationwide lockdown will reboot economic growth.
The S&P BSE Sensex and NSE Nifty 50 Index ended the day 0.8% higher after paring earlier gains of as much as 2%. Both gauges closed at their highest in almost three months -- levels seen before the world’s toughest stay-at-home curbs were imposed late March. Still, the Sensex is down about 17% for the year, more than double the drop in the regional MSCI Asia Pacific Index.
“The buoyancy is due to the opening up of economy locally and on the global front as well,” said Ajit Mishra, vice president of research at Religare Broking Ltd. in Mumbai. “We were underperforming global markets, which had been rallying for almost three weeks whereas our recovery began last week. We are catching up.”
Stocks have risen globally for eight days to their highest level versus estimated earnings since the early 2000s, as more businesses reopen around the world and manufacturing gauges show economies stabilizing following shutdowns. India’s services sector activity picked up in May, after posting the world’s lowest reading in April, data published by IHS Markit showed.
“It doesn’t make sense to look at the deteriorating numbers of the past for the stock market,” said Deven Choksey, managing director at Mumbai-based KR Choksey Securities Pvt. “Investors will continue to focus on the reopening of the economy and the stimulus given by the global central banks.”
India’s easing of curbs will see malls, restaurants and places of worship reopening from June 8 as the country attempts to revive an economy that’s headed for its first full-year contraction in more than four decades. Still, stocks lost altitude in the final hour of trading on Wednesday due to profit-taking ahead of the weekly expiry of some derivative contracts tomorrow, Religare’s Mishra said.
Meanwhile, a severe cyclonic storm Nisarga made landfall in Mumbai at a time when the city is already facing the brunt of a virus pandemic. The outbreak in the nation’s financial hub has snowballed, with the city now accounting for more than a fifth of India’s over 5,800 deaths and about 207,000 infections.
The rupee surrendered intraday gains to slip 0.2% to 75.4750 per dollar, ending a three-day rally. The yield on the most-traded 6.45% 2029 bond rose 3 basis points to 6.03%.
The Numbers
- Twelve of 19 sector sub-indexes compiled by BSE Ltd. advanced, led by measures of real estate and bank stocks.
- Mahindra & Mahindra Ltd. and ICICI Bank Ltd. were among the top gainers on the Sensex.
- NTPC Ltd. and IndusInd Bank Ltd. dropped.
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