The Bombay Stock Exchange (BSE) logo is displayed in front of a bronze bull statue in the Bombay Stock Exchange in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

Stocks Rally Loses Steam in India After Flirting With New Record

(Bloomberg) -- India’s benchmark stocks gauge rose for a third day on Monday to close on the verge of a record.

Expectations that the central bank will this week announce its second interest-rate cut for 2019, and a national election that will see Prime Minister Narendra Modi reelected helped boost sentiment in a market that capped its best quarter since June 2018 on Friday. Profit-booking in some bank stocks in the final hour of trade kept the Sensex from closing at a new high, traders said.

The S&P BSE Sensex Index added 0.5 percent to 38,871.87 after briefly topping its previous record set end of August, while the NSE Nifty 50 Index rose 0.4 percent. The rally mirrored a surge in stocks worldwide after strong manufacturing data out of China helped ease investor worries about a slowdown in global growth.

Foreigners have pumped more than $7 billion into India stocks so far this year -- among the highest in Asia -- on optimism that lower borrowing costs and a second term for Modi in the upcoming polls would support earnings growth in Asia’s third-biggest economy. The advance has put India on course to become first among markets valued at more than $1 trillion to hit a record high in 2019.

Stocks Rally Loses Steam in India After Flirting With New Record

Strategist View

  • Stocks have largely been driven by foreign flows betting on political stability and a revival in economic growth, said Jagannadham Thunuguntla, senior vice president and head of research for wealth at Centrum Broking Pvt. in Mumbai.
  • “The main trend of the Nifty is still up,” said Sameer Kalra, president at Mumbai-based advisory Target Investing. “The RBI will most announce a 25 bps cut, which is factored in by the rally.”
    • NOTE: The central bank will lower its key rate at an April 4 review, according to most economists in a Bloomberg survey.
  • Indian stocks were upgraded to overweight on the outlook for corporate profits, BNP Paribas SA analysts wrote in a note on the weekend.

The Numbers

  • 12 of the 19 sector indexes compiled by BSE Ltd. advanced, led by gauges of metals and software stocks.
  • 17 of the 31 Sensex members and 26 of the 50 Nifty stocks advanced. Tata Motors Ltd. and Vedanta Ltd. were among the top gainers on the index.

Analyst Notes/Market-Related Stories

  • Resurgent India Bulls Look to RBI to Keep Market Rally Going
  • BNP Upgrades India Stocks to Overweight, Cuts Korea on Earnings

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