Indian Stocks Advance Amid Optimism Over Earnings, Virus Vaccine

Indian stocks rose, tracking Asian peers, as a positive start to the domestic earnings season and promising results in early trials for a coronavirus vaccine bolstered risk appetite.

The S&P BSE Sensex climbed 1.4% to 37,930.33 in a fifth straight day of gains and has risen above its 200-day moving average. The NSE Nifty 50 Index added 1.3% and has also breached the technical indicator, forming a pattern that some investors read as a signal that gains can continue.

Both measures have jumped more than 45% from their March lows, while India’s economy heads for its first recession in 40 years after businesses all but stalled due to a nationwide lockdown. Individual investors have turned to equities for returns, even as foreign investors have sold a net $437.5 million of shares this month through Friday.

“It is only in equities -- that with some risk -- one can make some returns as other asset classes aren’t performing well in these times,” said Chokkalingam G, head of the investment advisory at Equinomics Research & Advisory Pvt. in Mumbai. “The positive news on vaccine trials has added more impetus.”

A vaccine under development by the University of Oxford and AstraZeneca Plc showed promising results in early human testing. China’s CanSino Biologics Inc. and a partnership of Pfizer Inc. and BioNTech SE also delivered positive trial updates. The spread of coronavirus has seen India emerge as host of the third-highest number of infections in the world.

With earnings season underway, five of the seven Nifty 50 companies that have announced the April-June quarterly results so far have either beaten or met analyst estimates on profits.

The rupee strengthened 0.2% to 74.7450 per dollar, while the yield on the 10-year benchmark government bond rose three basis points to 5.83%.

The Numbers

  • Fifteen of 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of energy stocks
  • Reliance Industries Ltd. contributed the most to the Sensex advance, increasing 2.7%, while Power Grid Corp of India Ltd. had the largest gain, rising 6.1%
  • Bajaj Finance Ltd. was the biggest drag on the index and also had the biggest drop, declining 4.3%

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