BackSensex jump most in month as global equities rally Janet Yellen’s comments
Sensex, Nifty jumped around 1.8% after US Federal Reserve chair Janet Yellen called for caution when raising interest rates
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Mumbai: Indian stocks advanced to a 12-week high before the expiry of the monthly derivative contracts as foreign inflows into the nation’s stocks accelerated and Federal Reserve Chair Janet Yellen reiterated the case for raising US interest rates slowly.
Tata Steel Ltd. and ICICI Bank Ltd., the nation’s biggest private lender, were the best performers on the S&P BSE Sensex. Lupin Ltd. rebounded from a January low. Bajaj Auto Ltd., the second-largest motorcycle maker, climbed the most in two months, while Tata Motors Ltd., owner of Jaguar Land Rover, climbed for a second day.
The Sensex rallied 1.8% to the highest close since 6 January, as stocks jumped around the world after Yellen signalled that weakening world growth called for a slow approach to tightening policy. The gauge is set for its best month since January 2012, as global funds bought $3.1 billion of local shares this month, the biggest inflow since March 2014.
“The markets are rising on the back of global risk-on trade and the dovish commentary from the Fed," Chokkalingam G., managing director at Equinomics Research & Advisory Pvt. in Mumbai, said in a phone interview. “Foreign inflow has been very strong this month and that’s supporting the market. All eyes will be on the Reserve Bank of India policy meeting next week." He is advising clients to buy engineering companies, tire-makers and some drugmakers.
Prime Minister Narendra Modi’s 29 February budget sparked a rally in India’s rupee, bonds and stocks as the government’s resolve to narrow the fiscal deficit to a nine-year low boosted investor sentiment. Data showing inflation eased to a four-month low in February also increased the odds of an interest-rate cut. The RBI will review rates on 5 April.
“The RBI and the finance ministry seem to be on the same page, and we are hoping that continues into the monetary policy as well," Anup Maheshwari, head of equities and corporate strategy at DSP BlackRock Investment Managers Pvt., which has $5.9 billion in Indian shares, said in an interview to Bloomberg TV India. “It will be exciting to see what else the RBI comes up with besides an obvious rate cut."
Lupin rallied 5.3%, rebounding from a slide of almost 10% in the past three days. ICICI Bank rose 6.3%, ending a two-day drop. Bajaj Auto added 3% to its highest level since 22 February. Tata Motors increased 4.3%.
Balrampur Chini Mills Ltd., the nation’s second-biggest sugar maker, surged 7.7% after the company said in an exchange filing it expects sweetener prices to extend a rally as production heads for a second year of decline. Production in India will drop 5% to 7% in the year beginning 1 October from about 25.5 million tons in 2015-16.
Other sugar mills, including EID Parry India Ltd. and Bajaj Hindusthan Ltd., rallied at least 8%.
The Sensex has risen 10.2% this month and traded above its 100-day moving average on Wednesday. The measure is valued at 15.4 times 12-month projected earnings, compared with 11.9 for the MSCI Emerging Markets Index. Bloomberg
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