Indian Stocks Cap Fourth Week Of Gains Amid Risk-On Trade
Gains were led by the auto sector.
Indian shares snapped a two-day losing streak led by gains in automakers, helping equity benchmarks to advance for a fourth week.
The S&P BSE Sensex rose 0.4 percent to 31,273 while NSE Nifty climbed 0.4 percent as well to 9,653 – the index’s first close above the level. The S&P BSE Auto Index lead the gains. Hero MotoCorp Ltd. and TVS Motor Co. rose after each posted an increase in sales for the month of May.
Another top gainer on the Nifty was Adani Power Ltd., which said its board will consider on June 6, a proposal for slump sale of its power generating business to another group company.
“Investors are on risk-on mode, where any and every negative is getting discounted very quickly,” Dipen Shah, senior vice president & PCG Research at Kotak Securities told BloombergQuint over the phone.
Shah said the optimism stems from a normal monsoon season forecast and an encouraging fourth quarter earnings season.
Twenty seven of the 50 Nifty companies reported earnings that beat or matched estimates. However, the combined net income of Nifty 50 companies climbed 12 percent in the January-March period from a year earlier missing estimates, while sales increased 14 percent, according to Bloomberg data.
“Earnings are expected to improve further from here on,” Shah said. According to him, technology and pharma continue to show signs of stress while select infrastructure companies have seen a bit of turnaround.
GMR Infrastructure Ltd. registered its best gain since May 2009 after it reported a pre-tax profit and its debt halved in the financial year 2016-17. The stock led a rally in the mid-sized infrastructure companies.
“There is some value emerging in the infrastructure sector,” Shah said.
Benchmark sovereign bonds clocked a third straight week of gains on optimism that the Reserve Bank of India will tone down its hawkish rhetoric at the next week’s policy meeting after inflation eased to a record and economic growth slowed.