Indian stocks gained for a second day, with the benchmark gauge erasing an earlier loss, as drugmakers and engineering companies climbed amid advances in global equities.
Dr Reddy’s Laboratories surged the most in two months, while Lupin rose for a second day. Larsen and Toubro (L&T) and Bharat Heavy Electricals (Bhel), producers of capital goods, were among the biggest gainers on the S&P BSE Sensex. Jain Irrigation Systems and EPC Industrie, makers of farm equipment, increased to four-month highs.
The Sensex rose 0.33%, or 83.67 points, to close at 25,772.53 points in Mumbai after Monday’s 1.8% advance. The gauge wiped an intraday loss as investors used the decline to buy drugmakers and companies most-tied to the economy, said Anita Gandhi, director at Arihant Capital in Mumbai. A rebound in European stocks aided the recovery, she said.
“Capital-goods stocks are being accumulated over past few days as core sector growth is improving, while pharma stocks are looking attractive after the recent declines,” Gandhi said. “Sentiment also got a boost from the positive opening in the European markets.”
The Nifty 50 index of the National Stock Exchange of India Ltd closed 0.28%, or 21.75 points, higher at 7,887.80.
Global funds bought $44.4mn of local shares on Monday, paring this month’s outflow to $41mn. Inflows have slowed after reaching a combined $4.7bn in March and April as pessimism over the pace of global growth cooled demand for riskier assets.
Earnings in the world’s fastest-growing major economy seem to be recovering after the worst run since the global financial crisis. Seven out of 12 Sensex firms that have posted March quarter results so far beat or matched estimates.
The Sensex has slid 1.3% this year and trades at 15.9 times 12-month projected earnings versus 11.3 for the MSCI Emerging Markets Index. 
Meanwhile the rupee yesterday closed at a seven-week low against the US dollar, tracking losses in Asian currencies.
The home currency closed at 66.68, a level last seen on 22 March, down 0.14% from its previous close of 66.58. The rupee opened at 66.69 and touched a low of 66.74, a level last seen on 26 April.
Several Asian currencies fell yesterday. Malaysian ringgit fell 0.86%, Japanese yen 0.62%, South Korean won 0.61%, Taiwan dollar 0.29% and China offshore 0.05%. However, Philippines peso was up 0.78%, Indonesian rupiah 0.21% and Singapore dollar 0.08%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.291, up 0.17% from its previous close of 94.128. Since 2 May, it has gained 1.8%.