An electronic ticker board indicates the closing figures of the S&P BSE Sensex at the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

Rally in Indian Stocks Tested as Sensex Swings Between Losses and Gains

(Bloomberg) -- Indian equities fluctuated as investors continued to look ahead to the outcome of a national election for direction even as minutes of the recent central bank meeting signaled more cuts in benchmark interest rate. Key indexes eked out weekly gains.

The S&P BSE Sensex dropped 0.1 percent to 35,871.48 at the 3:30 p.m. close in Mumbai, swinging at least 18 times between gains and losses, snapping a two-day rally. The NSE Nifty 50 Index rose less than 0.1 percent and both the gauges capped their third week of gains in four.

Even as minutes of the latest central bank meeting signaled more cuts in the key interest rate, uncertainty about the composition of the next national government is weighing on sentiment. Prime Minister Narendra Modi’s re-election bid has turned out tougher than earlier expected, with at least three pre-poll surveys suggesting that he won’t win a majority.

Rally in Indian Stocks Tested as Sensex Swings Between Losses and Gains

Strategist Views

  • “Markets will get a conclusive direction only after the election results in May, and they will keep reacting to global cues until then due to lack of any significant local factors,” said Chokkalingam G., managing director at Equinomics Research & Advisory Pvt.
  • “I see the Nifty trading in a 5 percent range from these levels until the election outcome and expect only a minor correction if the results aren’t to investors’ liking,” he said.
  • This is a good opportunity to buy mid- and small-sized stocks after their recent decline as they’re expected to rally more if a stable government comes to power, Chokkalingam said.

The Numbers

  • Thirty-five of the 50 Nifty shares and 22 of the 31 Sensex stocks gained. Yes Bank Ltd. advanced the most among Sensex members, rising 3.2 percent, extending its gain this year to 22 percent.
  • Fifteen of the 19 sector indexes compiled by BSE Ltd. advanced, led by a gauge of metal shares.
  • The S&P BSE MidCap and the S&P BSE SmallCap indexes extended their rallies to a fourth day.
  • Kotak Mahindra Bank Ltd. dropped the most among Sensex and Nifty members, falling 4 percent, as ING was said to have sold 23 million shares, according to terms of the deal.
  • Suzlon Energy Ltd. surged 29 percent, the steepest since October 2005, on a report that Vestas Wind Systems A/S is in talks to buy a controlling stake in the Indian firm. Shares pared day’s highest gains after Vestas said it’s strategy is for “organic growth.”

Analyst Notes/Market-related Stories

  • Asia’s Rich Entrepreneurs Have the Biggest Appetite for Leverage
  • Rupee Bonds May Gain After Dovish RBI Minutes: Inside India
  • SBI Upgraded to Buy at UBS; PT 360 Rupees

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