Birla Fashion, Reliance Infra Gain as Sensex Ends Little Changed

(Bloomberg) -- Companies involved in merger and acquisition talks advanced as the benchmark gauges were little changed before a Friday speech by Federal Reserve Chair Janet Yellen that may shed light on the outlook for U.S. borrowing costs.

Aditya Birla Fashion and Retail Ltd. rallied to a six-month high after the Economic Times reported the company is in talks with Future Group to sell its More supermarket business. Reliance Infrastructure Ltd. rose to a three-week high after selling its cement business to Birla Corp. Idea Cellular Ltd. surged the most since February after CNBC TV-18 reporting the company it exploring a merger plan with Vodafone India. Idea denied the story.

Investors are awaiting a speech by the Fed’s Yellen later this week at Jackson Hole, Wyoming, following hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley. The odds the U.S. central bank will raise borrowing costs in December climbed to 51 percent, while traders are betting there’s a 24 percent chance of tightening next month, data compiled by Bloomberg show.

“There’s some nervousness ahead of Yellen’s speech as this has been a liquidity-driven rally,” A. K. Prabhakar, head of research at Mumbai-based IDBI Capital Market Services Ltd., said by phone. “There are chances of a rate increase by the Fed.”

The Sensex has rebounded 22 percent from a low reached in February as capital flows to India accelerated amid a wave of global policy easing. Global funds have been net buyers of local shares for 30 days in a row, the longest run since November 2013. Foreign funds bought a net $81.2 million of equities on Aug. 19, extending this year’s inflows to $5.85 billion, the most in Asia after Taiwan and South Korea.

Idea Cellular surged 6.9 percent, the most since Feb. 12. Report about sale of the company to Vodafone is “baseless and absolutely false,” Aditya Birla Group spokeswoman Pragnya Ram says in an e-mailed statement after trading ended.

Welspun India Ltd. plunged by the daily 20 percent limit for a second straight day after Wal-Mart Stores Inc. said it’s reviewing Welspun’s cotton certification records, joining Target Corp. to scrutinize the supplier over cheaper bedsheets being passed off as premium Egyptian cotton.

The Sensex is valued at 16.2 times projected 12-month earnings, near the highest since April 2015. The MSCI Emerging Markets Index is valued at a multiple of 12.5.

To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net, Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Ravil Shirodkar