India Stocks Rise to Six-Month High as Rally Spreads to Midcaps
A Hero MotoCorp Ltd. Xtreme 200R motorcycle, left, stands on display in Noida, India. (Photographer: Anindito Mukherjee/Bloomberg)

India Stocks Rise to Six-Month High as Rally Spreads to Midcaps

Banks, automakers and Reliance Industries Ltd. helped lift Indian stocks for a fourth straight day in the final hour of trading.

The S&P BSE Sensex rose 0.6% to close at the highest level since the end of February after slipping as much as 0.2% earlier. The NSE Nifty 50 rose 0.7%. Both the indexes are closing in on records touched in January after rebounding by about 50% from pandemic-fueled slump in March. The August derivatives series will expire tomorrow.

“Investors are seeking growth stocks where they can still see value,” said Shrikant Chouhan, a technical analyst at Kotak Securities Ltd., “Reliance has the tailwind of an expected share sale of its retail subsidiary, and there is a catch-up trade taking place of mid-sized private banks that were lagging behind the leaders.”

The gauges of auto stocks and lenders jumped 1.5% each, the second-biggest gainers among 19 industry groups. Hero Motocorp Ltd., the world’s top maker of motorcycles and scooters, jumped 6.4% after Morgan Stanley raised the stock to overweight. A government panel will consider an industry request for a lower GST rate on two wheelers, the finance ministry said after trading ended yesterday.

Lenders, MidCaps

”A GST cut could trigger a sharp demand revival on a multi-year low industry base,” Binay Singh, an analyst at Morgan Stanley wrote in a note. “Hero Motors is the key beneficiary, if a GST cut includes premium bikes.”

RBL Bank Ltd. and IndusInd Bank Ltd. rose at least 6%, the top performers on a gauge of lenders. The mid- and small-cap indexes closed higher for the eighth straight session -- the longest run of gains since January.

The yield on the benchmark 10-year government bond climbed six basis points to 6.19%, while the rupee was little changed at 74.30 per dollar.

India’s quarterly earnings season is nearly over, with almost two-thirds of the Nifty 50 index members reporting number that met or exceeded estimates. The three companies yet to post results are Coal India Ltd., Oil & Natural Gas Corp. and Vedanta Ltd.

The Numbers

  • Eleven of 19 sector sub-indexes compiled by BSE Ltd. gained.
  • Seventeen Sensex shares rose while thirteen fell
  • IndusInd Bank rose the most on the Sensex, adding 6%, while Reliance Industries Ltd. gave it the biggest boost with a 2.6% jump.
    • Bharti Airtel Ltd.’s 2.7% fall was the steepest, and the stock was the biggest drag.

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