Extended Rally Caps Weekly Gain for India Stocks on U.S. Rebound

(Bloomberg) -- Indian equities gained for a third straight day and key indexes capped weekly advances, after U.S. stocks closed higher overnight on their biggest one-day recovery since 2010.

The benchmark S&P BSE Sensex climbed 0.8 percent to 36,076.72 at the 3:30 p.m. close in Mumbai, extending a three-day gain to 1.7 percent. The NSE Nifty 50 Index added 0.7 percent, with both gauges rising nearly 1 percent this week.

The key equity indexes also appeared likely to close 2018 with annual gains, as strong local inflows helped counter the worst sell-off by overseas investors in a decade. Markets are seen taking direction from global counterparts until Indian companies start reporting earnings for October to December next month. The national elections around May will also weigh on sentiment.

Extended Rally Caps Weekly Gain for India Stocks on U.S. Rebound

Strategist Views

  • “There’s a strong buying appetite whenever the market goes down,” said Abhijit Bhave, chief executive officer at Karvy Private Wealth in Mumbai. He said the Nifty will trade in a 10,500 to 11,200 range in the next month.
  • “There are three ‘E’s’ playing on sentiments now: the elections will have a short-term impact on the markets, but earnings and economic growth are the long-term drivers,” he said.
  • Trade tensions between the U.S. and China and any signs of their economies slowing are the biggest risks to local equities, while lower oil prices and expectations of strong earnings are positives, Bhave said.

The Numbers

  • Eighteen of the 19 sector indexes compiled by BSE Ltd. climbed, paced by a gauge of consumer durable makers.
  • Drugmaker Sun Pharmaceutical Industries Ltd. gained the most among Sensex members, climbing 3.4 percent, after a U.S. rival confirmed a court barred it from using some documents of DUSA, a unit of the Indian firm.
  • Lemon Tree Hotels Ltd. jumped 9.3 percent, the steepest gain in more than eight months, after forging a venture with Warburg Pincus to build and operate short- and long-stay properties.
  • State-owned lender United Bank of India rose 9.1 percent after saying it will get 21.6 billion rupees in funding from the government.
  • Earnings at the 50 Nifty companies are estimated to rise 19 percent in the financial year through March 2019, according to data compiled by Bloomberg, faster than the 16 percent pace last year. They are seen accelerating further to 22 percent next year.
  • The NSE Volatility Index dropped 5 percent, its first decline in three days.
  • Volume of stocks traded on the Nifty and Sensex were at least 30 percent lower than their 30-day averages.

Analyst Notes/Market-related Stories

  • Hold at Least 50% Large Caps in Indian Folio, Karvy’s Bhave Says
  • Eicher Motors Upgraded to Buy at Emkay Share; PT 27,700 Rupees
  • Ashok Leyland Rated New Accumulate at Stewart & Mackertich

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