India Stocks Extend Record Rally as Vaccine Results Fan Optimism
India Stocks Extend Record-Setting Rally on Vaccine-Results Boon
(Bloomberg) -- Stocks in India’s $2.2 trillion market joined a global rally as vaccine results fueled optimism of an exit from the pandemic after local benchmarks closed at record highs Monday.
The S&P BSE Sensex climbed 1.6% in Mumbai, while the Nifty 50 rose by 1.4%. Both gauges closed at fresh peaks, with relative strength index above 70, a level that may signal the gauges are overbought. Thirteen of the 19 sector indexes compiled by BSE Ltd. advanced Tuesday, led by a gauge of financial companies.
Shares advanced in most Asian markets after news that a vaccine being developed by Pfizer Inc. and BioNTech SE protects most people from coronavirus. India’s benchmarks had set a new record Monday after Democrat Joe Biden was declared the winner in the U.S. presidential election.
“The Pfizer news is driving positive investor sentiment, but the sustainability of this remains to be seen as it is a long way from the vaccine to the actual implementation,” said Sameer Kalra, a strategist at Mumbai-based Target Investing. “Also, while the U.S. election may have been called, the concerns over legal challenges are still alive.”
The rupee was little changed at 74.18 per U.S. dollar, while the yield on 10-year government bonds climbed four basis points to 5.92%.
With broad-based gains rooted in the re-opening of Asia’s third-largest economy and a better-than-expected earnings season seen continuing, traders are hunting for stocks with relatively more scope to deliver returns.
About 80% of stocks on the benchmark S&P BSE Sensex are trading above their 200-day moving average, compared with around 65% of members on the MSCI AC Asia Pacific Index.
“News of a vaccine can stimulate the Indian economy and propel it forward,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore. Given a pick-up in economic activities, a vaccine will boost demand even higher, he said.
Elections and Policy
While India remains the second-worst nation in the world when it comes to coronavirus infections, the most recent reported daily case count of about 45,000 is less than half the peak in mid-September, according to data from Johns Hopkins University.
Earnings have also pointed to a brighter picture than expected. Some 28 of the 42 Nifty 50-member companies that have announced results so far have beaten or matched estimates.
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