Indian stocks advanced for a fifth day, with the benchmark gauge ending three weeks of declines, amid expectation measures taken by Prime Minister Narendra Modi will lead to higher demand and bolster company earnings.
State-run fuel retailers Bharat Petroleum Corp and Indian Oil Corp jumped to records on optimism the $13bn pay jump for government staff will boost demand for cars. Oil and Natural Gas Corp (ONGC) surged as much as 6.2% in the last half hour of trade. Cigarette maker ITC Ltd rallied to a 16-month high, while Dr Reddy’s Laboratories climbed to its highest price in more than seven months.
The S&P BSE Sensex added 0.5% at the close, taking the week’s gain to 2.8% and recouping all its losses since the close of trading on June 23 when Britain went to the polls in the Brexit referendum. Asian equities are set for the biggest weekly climb since April as policy makers signalled looser monetary policies to buffer the impact of the UK’s decision to leave the European Union.
“The reforms momentum has gathered pace, the monsoon is on track, commodity prices are expected to remain low and the Fed’s rate-increase plan has been pushed back by the Brexit vote,” Kaushik Dani, a fund manager at Karvy Stock Broking Ltd in Mumbai, said by phone. “Investors are betting that these benefits will translate into higher profits for companies in the next few quarters. India is in a sweet spot.”
The Sensex on Thursday capped its best quarter since Modi’s election victory in May 2014.
The government in June eased rules on foreign direct investment, approved a new mining policy and accepted a plan to raise salaries for federal staff.
The measures helped soften the impact of the central bank governor Raghuram Rajan’s impending departure that was announced less than a week before the Brexit vote.Offshore funds invested $552mn in Indian stocks in June, marking a fourth straight month of purchases, as company earnings recovered after falling in four of the previous five quarters and the weather office forecast above-normal rainfall after two years of droughts. The inflows lifted the Sensex 18% from the lows reached in February.
Equitas Holdings rallied to a record after the companies received a permit from the Reserve Bank of India to start a small finance bank. The stock has risen 67% since its trading debut in April.
Mahanagar Gas, a city gas supplier, closed at Rs519.90 on the first day of listing, 24% above its IPO price of Rs421. The company’s founders last month raised Rs1,040 crore selling 24.7mn shares. The sale was oversubscribed 64.5 times.
Meanwhile the rupee yesterday strengthened for the third consecutive session against the US dollar, after local equity markets gained for the fifth consecutive session.
The currency closed at 67.32, up 0.3% from its previous close of 67.53. The local currency opened at 67.48 and touched a high of 67.32 a dollar. In this week, rupee gained 0.96%, its best weekly gain in 17 weeks
Most Asian currencies closed higher. Malaysian ringgit was up 0.76%, Indonesian rupiah 0.72%, South Korean won 0.59%, Japanese yen 0.58%, Philippines peso 0.45%, Singapore dollar 0.2%, Thai baht 0.15% and Taiwan dollar 0.14%. However, China renminbi was down 0.18%.
Indian manufacturing activity edged up to a three-month high in June, driven by stronger demand, but firms barely raised prices, a private survey showed, leaving the door open for another rate cut by the central bank this year.
The Nikkei/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June from May’s 50.7, its sixth month above the 50 mark that separates growth from contraction, after it fell below that level in December for the first time in more than two years.