Indian Shares Nearly Erase Day's Declines as Bank Stocks Rebound
Lenders Pace Indian Share Drop as Key Import-Finance Tool Banned
(Bloomberg) -- Indian shares nearly erased declines as lenders rebounded after falling earlier in the day. Investors bought stocks on the dip, which was spurred by the nation’s central bank saying it will no longer allow lenders to issue a key import-financing tool.
The benchmark S&P BSE Sensex closed 0.1 percent lower in Mumbai at 33,835.74, while the NSE Nifty Index fell 0.2 percent to close at 10,410.90. The gauges recovered from earlier losses of as much as 0.9 percent. Hero MotoCorp Ltd. fell the most among Sensex members, down 1.7 percent and halting a two-day rally. Private lender Yes Bank Ltd. was the biggest gainer, up 1.9 percent.
The Reserve Bank of India’s rule change that comes after a $2 billion fraud in the banking system was expected to hurt the state lenders more because of their higher exposure to trade financing. Some investors attributed the rebound in bank stocks and the broader indexes to buying at lower prices by local funds that are flush with money.
“Not only the banks stocks, but investors seem to be generally purchasing the dips in markets and the cushion against the fall comes most probably from the strong inflows into equity funds,” said Sushant Kumar, a fund manager at Raay Global Investments Pvt. in Mumbai. “The Nifty seems to be getting a strong support at a closing level of 10,400.”
The S&P BSE Bank Index -- a gauge of 10 lenders -- climbed 0.6 percent, erasing a loss of as much as 1 percent earlier in the day. It was the best performer among the 19 sector gauges compiled by BSE Ltd. Eleven sector indexes declined, paced by the S&P BSE Oil & Gas Index’s 0.9 percent retreat.
The Sensex and Nifty indexes are both down at least 0.8 percent in March after capping their worst month in two years in February. Still, local equity funds pulled in 163 billion rupees ($2.5 billion) last month, data from Association of Mutual Funds in India showed. The total inflow for the year that began April 1 was 1.64 trillion rupees, more than double the size in the same period a year earlier.
To contact the reporter on this story: Ameya Karve in Mumbai at akarve@bloomberg.net.
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Margo Towie, Jonathan Annells
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