India’s benchmark stock index rose for a second day on Friday, climbing to a six-month high, after BNP Paribas said the gauge may rise another 10% because of a better outlook for corporate earnings.
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“There is an improvement in fundamentals, in terms of growth in some sectors, companies’ ability to raise finances to tide over balance sheet problems, and confidence about future growth,” BNP’s analyst Manishi Raychaudhuri wrote.
The Bombay Stock Exchange’s Sensex rose 194.06 points, or 1.7%, to 11,329.05. The gauge posted its seventh week of gains advancing to its highest since 14 October. The S&P CNX Nifty index on the National Stock Exchange added 57.05 points, or 1.7%, to 3,480.75.
“The Sensex may climb to 12,300 by the end of the year, higher than an earlier forecast range of 10,000-11,500,” Raychaudhuri said.
Indian and Chinese stocks were driven down too far in the meltdown that started last year, said Jon Thorn, manager of the India Capital Fund.
“India and China got marked down more out of fear and panic rather than for a fundamental reason,” he said. “Indian large caps will outperform smaller companies as the constraints on capital and cost of capital will benefit larger companies over their smaller rivals.”
Indian banks are among the cheapest in the world, said Thorn, whose picks include State Bank of India, ICICI Bank and Punjab National Bank.
ICICI rose 2.3% to Rs434.10. M&M added 6.1% to Rs471.30. Tata Power gained 3.8% to Rs887.65.
BNP’s other picks include Axis Bank Ltd, which rose 5.5% to Rs529.60, and Bharat Heavy Electricals Ltd, which gained 1.4% to Rs1,643.40.
Overseas investors bought a net Rs1.8 crore of Indian stocks on 22 April, according to the stock market regulator.
GlaxoSmithKline Consumer Healthcare Ltd rose 6.2% to Rs785.75. The maker of Horlicks and Boost health drinks said first quarter profit rose 48% to Rs83.89 crore.
HDFC Bank Ltd added 1.6% to Rs1,110.25. The lender reported fourth quarter (Q4) profit rose 34% to Rs631 crore. That beat the Rs590 crore median estimate of analysts surveyed by Bloomberg.
IDBI Bank Ltd jumped 13% to Rs67.30, the most since 13 October after it announced profit in Q4 rose 28% to Rs314 crore.