Rally Pauses as India's Sensex Drops the Most in Nearly a Month

(Bloomberg) -- Indian equities retreated as the benchmark index dropped for the first time in nine trading sessions, reversing a gain earlier in the day.

The S&P BSE Sensex fell 0.6 percent to 38,164.61 at the close in Mumbai, its steepest decline since Feb. 26. The gauge had advanced of as much as 0.5 percent. The NSE Nifty 50 Index dropped 0.6 percent.

Even as foreigners have pumped in nearly $6 billion in Indian stocks in 2019 -- the highest among major Asian markets -- on bets that Prime Minister Narendra Modi will get another five-year term in May, investors expect corporate earnings and the Reserve Bank of India’s stance on borrowing costs to direct markets further.

Looser-than-anticipated global monetary policies have resulted in a gush of money to riskier emerging market assets such as India, where foreign funds have been net buyers of stocks for 10 straight days to March 19. The Sensex and Nifty have rebounded about 8 percent from this year’s low on Feb. 19.

Strategist View

  • “Barring the shorter-term corrections, which are normal, markets look positive in the medium term,” said Vaibhav Sanghavi, co-chief executive officer at Mumbai-based Avendus Capital PBC Markets Alternate Strategies LLP.
  • “Of course, election results are going to play a significant role in the shorter term; but after that it’s interest rates, liquidity and earnings which will be of paramount importance,” he said.

The Numbers

  • Fourteen of the 19 sector indexes compiled by BSE Ltd. dropped, led by a gauge of energy stocks.
  • Twenty-one of the 31 Sensex members and 32 of the 50 Nifty stocks fell. Both the Sensex and Nifty have been trading above their 14-day RSI of 70, a signal to some traders that a security is overbought, for eight days.
  • Tata Motors Ltd. -- India’s biggest truckmaker -- fell 2.7 percent, the most among Sensex members. Its luxury car unit Jaguar Land Rover said battery bottlenecks were limiting electric car rollouts.
  • SpiceJet Ltd. climbed 7 percent to its highest in nearly eight months as the aviation company said it’s in talks with lessors for more aircraft, in a reply to reports that it’s considering taking over some aircraft from debt-laden rival Jet Airways India Ltd. Jet added 3.4 percent.
  • Krypton Industries Ltd. jumped 9.5 percent, most in more than five months, after winning a 231 million rupee order.
  • Auto-components maker Motherson Sumi Systems Ltd. slid 6.4 percent, the worst performer on S&P BSE 200 and S&P BSE 500 indexes. About 8.4 million shares, or 0.3 percent of its equity, changed hands in a single block on BSE Ltd., according to data compiled by Bloomberg. Buyers and sellers weren’t immediately known.

Analyst Notes/Market-Related Stories

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  • Aster DM Healthcare Rated New Buy at HSBC; PT 205 Rupees
  • Finolex Cables Cut to Hold at Jefferies; Price Target 525 Rupees

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