Indian stocks rose for a second day, sending at least four companies in the benchmark gauge to a record close, as overseas investors extended their purchases of local shares amid gains in global equities.
The S&P BSE Sensex closes 0.46%, or 128.27 points, higher at 27,915.89, while the Nifty 50 closes 0.44%, or 37.30 points, higher at 8,565.85.
Coal India, the world’s biggest miner of the fuel, was the top gainer on the S&P BSE Sensex. HDFC Bank, the most valuable lender, climbed to a record before its quarterly earnings today. Power Grid Corp and motorcycle makers Hero MotoCorp and Bajaj Auto rallied to all-time highs. Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp, the nation’s largest refiners, also increased to records.
Foreigners have bought $847mn of stocks since July 1, adding to four straight months of inflows that have lifted the Sensex 22% from a low in February amid strong rain after back-to-back droughts and signs of recovery in company earnings. Global equities added more than $4.5tn in value in the past three weeks amid expectations policy makers will step up stimulus to stem the economic fallout arising from the UK shock decision to leave the European Union.
“One has to see how global growth pans out, but the domestic side is where things are looking better,” Mahesh Patil, co-chief investment officer at Mumbai-based Birla Sunlife Asset Management Co, which has $22bn in assets, said in an interview to Bloomberg TV India. “The monsoon’s impact will be felt in the second half, while demand in core sectors like cement and oil has been looking better for the past few months.”
Rainfall in the June-September monsoon season, which accounts for more than 70% of India’s annual showers, was 2% above normal as of Tuesday. Fuel demand rose 11% in the year ended March, the fastest pace since at least fiscal 2001, while air travel expanded 23% in the first five months of this year, official data show.
Overseas funds bought $106mn of shares on Tuesday, an eighth day of net purchases. The inflows have pushed the Sensex’s valuation to a 16-month high, leaving share prices with little room to climb further if more companies report earnings that miss estimates. The gauge fell on Friday and Monday after Infosys, the second-biggest software maker, and Hindustan Unilever (HUL), the largest consumer products company, posted earnings that disappointed investors.
Wipro, the third-biggest software maker, dropped for a fifth day after its first-quarter profit and revenue missed forecasts. Earnings came after trading ended on Tuesday. HDFC Bank, ITC  and Bajaj Auto are due to announce results this week.
“Despite the multiples being high, there’s still some steam left in the rally going by the inflows,” Abhimanyu Sofat, founder of AdviseSure Ventures in Mumbai, said by phone. “We have a cyclical upturn and a good monsoon has added to the cheer by reducing the fear of food inflation flaring up.” He is advising clients to buy shares of infrastructure finance, road builders and energy companies.
Meanwhile the rupee yesterday weakened against the US dollar, tracking the fall in the Asian currencies market. The home currency closed at 67.20, down 0.13% from its previous close of 67.11. The local currency opened at 67.15 a dollar.
Asian currencies dropped marginally as investors are unlikely to have huge positions before the US Federal Reserve and Bank of Japan meetings next week, according to a Bloomberg report.
Malaysian ringgit was down 0.457%, South Korean won 0.453%, Philippines peso 0.435%, Japanese yen 0.385%, Singapore dollar 0.383%, Indonesian rupiah 0.175% and Taiwan dollar 0.08%. However, China offshore spot was up 0.42% and China renminbi 0.29%.
Foreign institutional investors (FIIs) have turned net buyers of Indian debt as hopes of a normal monsoon and a dovish central bank governor have renewed expectations of further rate cuts.
The fall in global bond yield prices to multi-year low and the probability that the Fed may delay the rate hike due to the Brexit on the impact worries also boosted sentiment.