Mumbai: India’s benchmark stock index rebounded from the lowest close in four months amid speculation the recent decline was excessive and as investor concern eased that Greece may default on its debt.
Reliance Industries Ltd, India’s most valuable company, increased 1.9%, halting seven days of losses. Tata Consultancy Services Ltd, the largest software exporter, surged most in two months.
Housing Development Finance Corp. Ltd, the biggest mortgage lender, climbed the most in three weeks.
The Sensex rose 53.67, or 0.3%, to close at 17,560.30 in Mumbai. It climbed as much as 1.2% earlier.
Its 14-day relative strength index, a gauge of how rapidly prices gained or fell during the specified period, reached 28.7 on Monday.
A reading below 30 is a signal to buy for some investors.
“We are incrementally turning more and more bullish,” said Sampath Reddy, who manages $6.7 billion as chief investment officer for equities at Bajaj Allianz Life Insurance Co. Ltd. Valuations have corrected to attractive levels.
“We are eagerly looking to invest more money in equity markets in the next couple of months,” Reddy, who is overweight on shares of drug makers, fast-moving consumer goods and telecom companies, said.
Asian stocks increased for the first time in five days as concern eased that Greece will default after Luxembourg’s Jean-Claude Juncker, leader of euro-area finance ministers, indicated a solution to the crisis will be found.
The Sensex slumped to a four-month low on Monday after a report the government sought to tax gains on investments routed through Mauritius sparked a sell-off.
The gauge has declined 14% in 2011, the worst performer in Asia. Sensex stocks are valued at 14.3 times estimated earnings, compared with 10.8 for the MSCI Emerging Markets Index.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.3% to 5,275.85 and its June futures settled at 5,276.10.
The BSE 200 Index increased 0.1% to 2,182.50.
About 64% of local brokers expect the Nifty to drop as much as 5% and trade in the range of 5,000-5,200, according to a survey of 20 brokerages by Bloomberg UTV.
The brokers are bullish on shares of telecom and consumer goods companies. They are negative on shares of automakers, software, cement, metals, infrastructure and state-run lenders.
“Markets could be very volatile in the short term, given the kind of headwinds we’re facing, whether it’s the Greece concern or the interest rate hikes that have been happening,” Bajaj’s Reddy said.
The headwinds will probably be over in a couple of months or so.
Overseas investors sold a net Rs 363 crore of Indian stocks on 17 June, taking total withdrawals this year to Rs 1,170 crore, according to data on the website of the Securities and Exchange Board of India.