Indian Equities Extend Rally to Fourth Day

(Bloomberg) -- Indian equity bulls were tested but key indexes eked out gains, as investors reviewed a central bank board meeting to assess whether the new governor will align with the government to ease lending controls. The indexes capped weekly gains after rallying a fourth straight day.

The benchmark S&P BSE Sensex added 0.1 percent to 35,962.93 at the 3:30 p.m. close in Mumbai, after swinging between gains and losses. The NSE Nifty 50 Index also added 0.1 percent. Both gauges rose for a second week in three.

The Reserve Bank of India’s board Friday bought more time to consider the government’s demand for a greater say in the central bank’s functioning, one of the issues that had fostered hostilities between the two sides.

Strategist Views

  • “Markets will be watching the plan of action to be adopted by the new governor in terms of handling the resolution of the IL&FS default, related liquidity conditions and the sensitive topic of the RBI reserves,” said Jagannadham Thunuguntla, senior vice president and head of research for wealth at Centrum Broking Pvt. in Mumbai.
    • Investors can stick with quality stocks backed by strong fundamentals and low debt, he said.
  • “Given the ongoing political dynamics and possibility of a change in government at the center, investors would likely settle for safety and quality until May 2019,” Kim Eng Securities India Pvt. said in an investor note on Dec. 12.
    • Any positive returns in 2019 could only be back-ended as uncertainty would seemingly preclude a major rally in the first half, analysts Jigar Shah, Neerav Dalal and Vishal Periwal wrote.

The Numbers

  • Thirteen of the 19 sector indexes climbed, paced by a gauge of telecom shares, after an India tribunal accepted the wireless carriers’ requests against the regulator and directed it to reconsider definitions of a significant market player and predatory pricing.
  • Telecom firm Bharti Airtel Ltd. rose the most, climbing 5.3 percent.

Analyst Notes

  • Bandhan Bank Rated New Sell at Ambit; PT 280 Rupees
  • United Breweries Rated New Buy at Citi; PT 1,550 Rupees
  • Lumax Auto Rated New Buy at IDBI Capital Market

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