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 was the biggest gainer on the S&P BSE Sensex after the largest mortgage lender picked banks to arrange an initial public offering of its life insurance venture. Bharat Heavy Electricals rebounded from its biggest drop in two months. Sun Pharmaceutical Industries, the most valuable health-care company, rose for a second day after the success of its psoriasis drug trials. Its peers Lupin and Cipla 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, said by phone. “Market valuations are near their one-year forward historical averages.” Indiabulls Real Estate jumped to its highest level since October 19, the best performance on the S&P BSE India Realty Index. DLF, the biggest developer, jumped 3.3%, 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 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, which manages about $3bn in assets worldwide, said by phone. “We are positive on real-estate stocks as interest rates decline and asset prices drop.” Foreign investors unloaded $4.6mn of local stocks on May 4, paring this year’s inflows to $1.7bn. They invested $585mn last month after an inflow of $4.1bn 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.
Meanwhile, the rupee was little changed at 66.5550 a dollar in the spot market yesterday. The rupee has retreated 0.3% this week.