India Stocks Extend Record as Modi’s Alliance Secures State Poll
(Bloomberg) -- India’s benchmark equity index climbed to a record as a ruling party alliance won a state election, adding to positive sentiment amid a pick-up in business activity.
The S&P BSE Sensex rose 0.7% to close at 43,593.67 in Mumbai, after falling by an equal measure earlier in the session. The NSE Nifty 50 Index advanced 0.9%. Both gauges completed their longest string of gains in a month to end at new peaks.
Still, both measures’ relative strength indexes are above 70, a level that may signal they’re overbought, while a measure of volatility climbed for a second day to a one-week high.
“On higher levels, a little bit of profit-booking is expected,” said Ravi Singhal, vice chairman at Jaipur-based GCL Securities Limited.
Prime Minister Narendra Modi’s party retained control through a coalition in the eastern state of Bihar in its first election since the pandemic struck. While India has the world’s second-largest coronavirus case count, new infections are less than half of the peak in mid-September, according to data from John Hopkins University.
Modi’s alliance’s “win in Bihar suggests political immunity from the pandemic,” Sonal Varma, chief economist for India and Asia, ex-Japan, at Nomura Holding Inc. in Singapore, wrote in a note. The results indicate that the prime minister remains popular, she said.
India’s emergence from the world’s biggest lockdown has triggered a revival in demand, even as Asia’s third-largest economy is forecast to contract this year for the first time in about four decades.
“There is optimism that an economic recovery may be faster as business activity is steadily rising close to the pre-pandemic levels,” said Kranthi Bathini, an equity strategist at WealthMills Securities Ltd.
As earnings season continues, 28 of the 43 Nifty 50-member companies that have announced results so far have beaten or matched analyst estimates. Coal India Ltd., Power Grid Corp. and Shree Cement Ltd. are due to report results today.
The rupee weakened 0.3% to 74.3725 per U.S. dollar, while the yield on the 10-year government bond fell 1 basis point to 5.91%.
- All but two of 19 sector indexes compiled by BSE Ltd. rose, led by a gauge of metal companies
- Infosys Ltd. contributed the most to the Sensex advance, increasing 2.9%, while Tata Steel Ltd. had the largest gain, rising 7.4%
- Reliance Industries Ltd. was the biggest drag on the index, declining 4.2% and IndusInd Bank had the biggest drop, falling 5.6%
- Stocks including Adani Green Energy Ltd., Apollo Hospitals Enterprise Ltd., Balkrishna Industries Ltd., and Kotak Mahindra Bank Ltd. surged after being included in the MSCI Asia Pacific November review
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