India Stocks Rise for Second Day Amid Liquidity Optimism
India Stocks Rise for Second Day Amid Liquidity Optimism
(Bloomberg) -- Indian stocks rose for a second straight day as some investors bet there’ll be enough liquidity to support the economy as the nation gradually exits from the world’s biggest lockdown.
The S&P BSE Sensex climbed 2.1%, the most since April 30, to close at 30,818.61 in Mumbai, while the NSE Nifty 50 Index rose by a similar magnitude. Both measures have sunk more than 25% this year. The rupee fell 0.2% to 75.7975 per dollar, while the yield on most-traded 2029 bonds was little changed at 6.04%.
“Liquidity is going to be there for the near-term, which casts a perfect recipe for a risk-on trade,” said Sanjiv Bhasin, a strategist at IIFL Securities Ltd. in Mumbai. “On the face level, the extension of the lockdown may have given weakness.”
The government has unveiled stimulus equal to 10% of the economy since February, while overseas investors have poured nearly $1.3 billion into India’s equities this month as the Sensex’s 12-month estimated price-to-earnings ratio fell below its three year average.
“Many cities have opened up so investors believe the manufacturing activities can restart. Reopening optimism is giving comfort to the market,” said Chokkalingam G, chief investment officer at Equinomics Research & Advisory Pvt. in Mumbai.
“A lot of investors missed the rally from March 23 bottom because they went by weak fundamentals and so now they’re coming back to see if they can minimize their losses for the year.”
With a lockdown through May 31 gradually being eased to allow some commerce, India has 106,475 Covid-19 infections and 3,302 deaths, according to data from John Hopkins University.
As the earnings season for the quarter through March continues, only five of the 20 Nifty 50 companies that have reported results so far have beaten analyst estimates.
Reliance Rights
- Reliance Industries shares rose 1.8% as the company’s $7 billion rights issue -- its first share offer in about three decades -- opened Wednesday.
- The price for rights entitlement settled at 212 rupees a share, 40% premium over the previous close of about 152 rupees, according to the NSE.
- The rights entitlement price is the difference between the previous day’s closing price -- Reliance stock closed at 1,409 rupees on Tuesday -- and the rights issue price of 1,257 rupees apiece.
- More than 29 million of the rights entitlements changed hands, higher than Reliance’s share volume of 25.5 million on the NSE, the exchange data show
- NOTE: The offering tested the platform for trading rights entitlement launched by the market regulator earlier this year. The platform allows shareholders to give up their shares for a price. Until now, shareholders who didn’t wish to apply had no choice but to let their rights lapse.
The Numbers
- 18 of 19 sector sub-indexes compiled by BSE Ltd. gained, led a gauge of healthcare companies.
- HDFC Bank Ltd. contributed the most to the Sensex’s gains, while Mahindra & Mahindra Ltd.’s 5.9% advance was the biggest. Bharti Airtel Ltd. was the biggest drag and IndusInd Bank Ltd. was the biggest loser with a 2.9% drop.
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