India’s benchmark stock index completed its biggest weekly advance since March after better-than-expected earnings from some of the country’s biggest companies bolstered investor sentiment amid increases in global equities.
State Bank of India rallied the most in three months amid optimism that the worst may be over for the nation’s largest bank after Chairman Arundhati Bhattacharya said most the troubled assets have been recognised. Refiners Bharat Petroleum Corp and Hindustan Petroleum Corp surged to records after their profits beat estimates. Larsen & Toubro was the top performer this week after it forecast sales to rise this year.
The S&P BSE Sensex jumped 1.1% at the close in Mumbai, taking the weekly gain to 5.3%. Thirteen out of 24, or 54%, of Sensex posted that have reported March-quarter results have beaten or matched estimates. That compares with 53% in the December quarter, data compiled by Bloomberg show. Forecasts for above-average rain after back-to-back droughts added to the optimism about the nation’s equities.
“Improving global risk appetite, better company earnings and the monsoon forecast have boosted sentiments,” said Chokkalingam G., managing director at Equinomics Research & Advisory in Mumbai. “It’s raining good news for investors. This rally was long due.” He’s bullish consumer goods companies and medium-sized software exporters.
Company earnings are recovering after falling in four of the last five quarters, which was the worst run since the financial crisis. Showers in the June-September season starting June 1 are seen at 109% of the mean of about 89 centimetres (35 inches), more than the 105% predicted in April, Skymet Weather Services, a New Delhi-based private forecaster, said on Tuesday. That’s more than the quantum forecast by the state weather office and would be the highest since 1994.
State Bank soared 6.4% to its highest level since April 27, taking the week’s gain to 14%. The lender reported the sharpest fall in profits in five years as provisions for bad loans surged. Gross non-performing assets for the March quarter were at 6.5% versus 5.1% in the three months ended December. Other state-run banks, including Bank of Baroda, have reported ratios in the 10% to 15% range.
“SBI’s gross NPA ratio was much lower than its peers,” Purvesh Shelatkar, senior vice president and head of equities at BOB Capital Markets, said by phone from Mumbai. “Some investors were expecting the ratio to widen as much as the bank’s peers. They were forced to cover their short positions” after earnings were announced, he said.
Bharat Petroleum jumped the most since January 2013 to a record. India’s second-largest fuel retailer posted net income of Rs25.5bn, exceeding the Rs19.1bn estimate. Gross refining margin was at $6.3 a barrel and significantly above expectations, said Bhavin Gandhi, an analyst at Batlivala & Karani Securities.
Hindustan Petroleum had the biggest gain since June 2010, after reporting fourth-quarter net income of Rs15.5bn that exceeded the estimate of Rs10.9bn.
Meanwhile the rupee yesterday closed stronger against the US dollar for the third consecutive session, as the local equity market gained for the fourth session. Traders were cautious ahead of the gross domestic product (GDP) data which is due next week.
The home currency closed at 67.04, up 0.21% from its previous close of 67.18. The rupee opened at 67.05 per US dollar and touched a high of 66.95, a level last seen on May 18.
The government will release GDP data for the March quarter on 31 May after 5.30pm. Gross value added (GVA) would have grown by 7.2% in the said quarter compared with 7.1% in December quarter, while GDP growth will be at 7.5% from 7.3% a quarter ago, a Bloomberg poll showed.
Most Asian currencies closed mixed. Japanese yen was up 0.12%, South Korean won 0.1%, Taiwan dollar 0.08%, Philippines peso 0.05%. However, Thai baht was down 0.17%, China offshore 0.14%, Singapore dollar 0.11%, Malaysian ringgit 0.04%.
Meanwhile, India’s 10-year bond yield closed at 7.471%, as compared with its Thursday’s close of 7.469%.