Mumbai: Indian shares rebounded 1.4% on Thursday, buoyed by a rally in equity markets worldwide after recently beaten-down Chinese shares rose and boosted commodity prices.
The outlook for the domestic economy is clouded by poor rains that have already hit crops and sowing activity in vast hinterlands, but ample global liquidity could support stocks as long-term investors look to buy on declines, traders said.
“The availability of liquidity globally is still very good, and so expect the markets to overstretch themselves,” Manish Sonthalia, portfolio manager at Motilal Oswal Financial Services Ltd, said.
“This will continue to baffle people, but that is how it is going to play out.”
Top telecoms firm Bharti Airtel erased gains of as much as 1.6% to end down 1.2% at Rs400.05,after the firm and South Africa’s MTN again extended exclusive merger talks, raising concerns the deal structure was too complex to succeed.
Adani Power Ltd initially rose as much as 7.9% in its debut, but later pared gains, suggesting high-priced initial public offers (IPOs) could face investor resistance.
Shares in the utility, which raised $630 million in India’s first large IPO in 18 months, ended up 0.05% at Rs100.05, after slipping to 98.50 rupees during trade.
Energy giant Reliance Industries rose 0.8% to Rs1,898, while state-run explorer Oil and Natural Gas Corp advanced 1.8% to Rs1,178.85, as oil held steady above $72 a barrel on Thursday, after rising more than 4% the previous day.
Leading lender State Bank of India climbed 3.7% to Rs1,753.60, and private-sector rival HDFC Bank added 2.3% to Rs1,480.60, No. 2 outsourcer Infosys Technologies gained 2.2% to Rs1,992.80.
The 30-share BSE index ended up 1.37%, or 202.68 points, at 15,012.32, with only Bharti’s stock declining. The 50-share NSE index rose 1.35% to 4,453.45.
The benchmark had fallen 5.5% this month through Wednesday, weighed down by worries about the weak monsoon, high valuations and looming inflation.
“Today’s bounce back is only because many technical indicators show the market is in oversold territory. But the market’s consolidation is not yet over,” Alex Mathew, head of research at Geojit BNP-Paribas Financial Services, said.
A slew of recent downbeat data has stoked doubts about the pace of a global economic recovery, adding to fears about stocks having risen ahead of fundamentals.
“Trading will be very volatile over the next few days, after which we will get a clear buy or sell signal,” Mathew said.
Chinese shares have encountered aggressive profit-taking after almost doubling this year, losing more than 20% in two weeks to fall to a two-month low, a sell-off that has reverberated across global equity markets.
On Thursday, however, Chinese shares climbed, lifting Hong Kong-listed stocks, amid signs of official support for the sliding markets including the approval of new funds.
India’s monsoon deficit slightly narrowed to 27% as at Aug. 18 as improved rainfall in the past week reduced the seasonal shortfall by two percentage points, government sources said on Thursday. Meagre rainfall has pushed India to the brink of drought, putting pressure on food prices and energy supplies. [ID:nDEL212068]
India’s wholesale price index fell in the year to 8 August for the tenth week in a row, but drought-like conditions continued to push up food prices and broader inflation is expected by economists to rise sharply in coming months.
In the broader Indian market, gainers led losers 1,531 to 1,160 on moderate volume of 410.6 million shares.
Asian shares were higher, with Japan’s Nikkei rising 1.8%, while MSCI’s measure of other Asian markets was up 1.4%.