Mumbai: Indian shares climbed, with the BSE Sensex posting its first weekly advance in five, as a recovery in the rupee from a record low and a rebound in Asian equities spurred traders to close bearish bets.
Software exporters and drug makers led gains in the benchmark S&P BSE Sensex, which reclaimed the 26,000 level after breaking below it on Thursday. The rupee rebounded 0.4% after it breached the record low set in 2013 on Thursday amid a 2.5% decline this month, far less dramatic than the 8.1 % plunge seen in August 2013. The MSCI Asia Pacific Excluding Japan Index also recovered from the previous day’s drop.
Indian equities have been battered this month amid mounting concern the government’s recall of Rs15 trillion of currency notes—or 86% of total bills in circulation—will hurt economic growth. The cash crunch may pull down gross domestic product in the year through March by 0.5 percentage points, Citigroup Inc. said in a report.
“Stocks and rupee are rebounding from oversold territory as the number of bearish bets have come down, which is helping sentiment,” Jitendra Panda, chief executive officer at Peerless Securities Ltd, said by phone from Kolkata. “Software and commodity stocks are the best place to hide now as these sectors are not impacted by demonetisation.”
Capital outflows from emerging markets after Donald Trump’s shock victory have added pressure on Indian equities. Global funds have withdrawn $1.9 billion from local shares this month, the highest in Asia after Taiwan, data compiled by Bloomberg show. Domestic funds, in comparison, have bought $1.8 billion of shares, the data show.
The Sensex is valued at 15.5 times projected 12-month projected earnings, near the cheapest level since May. That compares with the MSCI Emerging Markets Index’s multiple of 12. Bloomberg