Indian Stocks Advance in Special Session to Mark Diwali 

(Bloomberg) -- Indian shares rallied in the ceremonial late-evening session to mark Diwali, the Hindu festival of lights, as earnings of some of the biggest companies bolstered optimism about the recovery in the nation’s economy.

The S&P BSE Sensex and NSE Nifty 50 gauges ended higher in the one-hour session, paced by automakers. Tata Motors Ltd., the owner of Jaguar Land Rover, surged the most in more than a decade after posting a narrower loss than expected in the second quarter.

The centuries-old tradition of seeking the blessings of Lakshmi has taken on an added purpose this year as investors pray the recent government steps revives economic growth and solidifies the recovery in equities that’s taken the $2 trillion market close to its June peak.

“There is optimism that things are turning around for the market, and if over the next three to four months there’s an improvement in demand we’ll be home,” said Dharmesh Kant, head of research at Indianivesh Securities Ltd. in Mumbai. “The bias is positive.”

While India’s key equity indexes have risen at least 10% since last Diwali, led by a handful of heavyweights, the broader market has trailed the gains sparked by a surprise tax cut for corporates and the return of global funds to domestic equities. That’s as investors continue to seek the safety of the biggest stocks in times of tepid earnings growth and a lingering credit-market crisis.

Still, analysts remain optimistic that the stimulus measures and the five back-to-back rate cuts so far in 2019 will help narrow this divergence in the new Hindu financial year -- Samvat 2076 -- that began Sunday. Cyclicals, a battered corner of India’s stock market, will likely lead the gains.

“We think that this is the time to buy cyclical and more the beaten up the name is, the more attractive it is,” Ridham Desai, managing director at Morgan Stanley India, told BloombergQuint. Morgan Stanley’s model portfolio is focused on buying cyclicals and not defensive stocks, which most people prefer during times of turbulence, he said.

The token purchases mark the beginning of the new Hindu financial year, Samvat 2076, and the ritual has been observed for years in the belief that it brings wealth and prosperity. The Sensex has ended higher in eight of the past 12 Diwali-day sessions. Markets will be closed Monday.

The Sensex climbed 0.5% to end the special session at 39,250 and the NSE Nifty 50 Index added 0.4% to 11,628. On Friday, the gauges closed little changed.

In the mid- and small-cap space, the NSE Nifty MidCap 100 rose 1.2% and the NSE Nifty SmallCap 100 gained 1.2% on Sunday. The market breadth was tilted in favour of buyers as 1,317 stocks advanced and 386 shares declined on NSE.

All the 11 sector gauges compiled by NSE traded higher, led by the NSE Nifty Auto Index’s 1.4% gain. Of the 25 Nifty companies that have announced results so far, 17 have either matched or exceeded analyst estimates, while one didn’t have any estimates.

“Earnings report for companies so far haven’t disappointed even on a pre-tax level,” Kant said. “Auto companies like Hero MotoCorp have also put up a good set of numbers, which is a positive sign.”

To contact the reporters on this story: Ravil Shirodkar in Mumbai at rshirodkar@bloomberg.net;Nupur Acharya in MUMBAI at nacharya7@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, ;Lianting Tu at ltu4@bloomberg.net, Ravil Shirodkar

©2019 Bloomberg L.P.