Sensex rebounds from 3-week low, closes 160 points higher; Bhel, HDFC lead gains

Mumbai: Indian stocks climbed, led by industrials and real estate companies, as some investors judged the decline in the benchmark index to a three-week low was excessive.

Housing Development Finance Corp. Ltd (HDFC) was the biggest gainer on the S&P BSE Sensex after the largest mortgage lender picked banks to arrange an initial public offering (IPO) of its life insurance venture. Bharat Heavy Electricals Ltd (Bhel) rebounded from its biggest drop in two months. Sun Pharmaceutical Industries Ltd, the most valuable healthcare company, rose for a second day after the success of its psoriasis drug trials. Its peers Lupin Ltd and Cipla Ltd were also among the biggest gainers on the index.

The Sensex climbed 0.6% to 25,262.21 at close in Mumbai. The gauge slid to a three-week low on Wednesday, capping three days of losses, as anxiety over slowing economic expansion globally and renewed concerns about higher US interest rates curbed demand for riskier assets. The decline pulled down the index’s valuation to the cheapest level since March.

“Industrial and utilities stocks are moving higher as they were considerably beaten down and as there is revival in industrial activity,” Pankaj Sharma, head of equities at Equirus Securities Ltd, said by phone. “Market valuations are near their one-year forward historical averages.”

Property stocks

Indiabulls Real Estate Ltd jumped to its highest level since 19 October, the best performance on the S&P BSE India Realty index. DLF Ltd, the biggest developer, jumped 3.4%, ending three days of losses. The gauge has surged 30% from a February low amid optimism lower borrowing costs would stoke demand for property. The Reserve Bank of India (RBI) has cut benchmark interest rates five times since the start of 2015.

“Industrial stocks rebounded amid expectation that transmission of interest rates will lower their interest burden in the coming quarters,” Chakri Lokapriya, the Mumbai-based chief investment officer at TCG Advisory Services Pvt. Ltd, which manages about $3 billion in assets worldwide, said by phone. “We are positive on real-estate stocks as interest rates decline and asset prices drop.”

Foreign investors unloaded $4.6 million of local stocks on 4 May, paring this year’s inflows to $1.7 billion. They invested $585 million last month after an inflow of $4.1 billion in March, which was the highest in three years.

The Sensex has retreated 3.3% this year and trades at 15.5 times 12-month projected earnings versus 11.3 for the MSCI Emerging Markets Index. Bloomberg

Rajhkumar K Shaaw contributed to this story.