India's Sensex Climbing to Four-Month High Masks Wider Weakness

(Bloomberg) -- India’s benchmark equity index rose to its highest level since September in a late surge helped by gains in a handful of large-cap stocks, as investors digested the the government’s last federal budget before the national ballot.

The S&P BSE Sensex rose 0.3 percent to 36,582.74 in Mumbai after falling as much as 0.7 percent in early trade. The advance masked weakness in the broader market, with gauges of small and mid-cap shares falling at least 1 percent. Volume in the benchmark indexes was about 20 percent less than the 10-day average at close.

The government proposed allocating 750 billion-rupee ($10.5 billion) a year for the cash plan for about 120 million farmers and giving taxpayers 185 billion rupees of relief in the year to March 2020, Finance Minister Piyush Goyal said in his budget speech in New Delhi on Friday.

The Numbers

  • Fourteen of 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of utilities
  • Reliance Industries Ltd. gave the biggest boost to the benchmark index
  • Reliance Communications Ltd. plunged 35% after the company filed for bankruptcy
  • Titan Co. Ltd. rose as much as 3.5% to record after 3Q net profit beat estimates
  • Adani Power Ltd. dropped 10% and Adani Enterprises 14%; analyst sees debt rating review soon

Strategist View

  • “Fund managers are now reviewing their allocation as the budget is over and the focus will now be the ever changing political equations,” said Jitendra Panda, managing director at Peerless Securities Ltd. in Kolkata. “Indexes are likely to stay volatile and action will be very stock specific.”
  • “Investors are likely to now shift focus to national elections as the budget event is over,” said Joseph Thomas, Mumbai-based head of research at Emkay Wealth Management
  • “Corporate governance issues with regard to some companies is expected to keep the sentiment in check, ” he says

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