Indian stocks climbed for the first
time in four days after the central bank indicated it has more
room to lower borrowing costs following a slowdown in economic
growth and a drop in oil prices.
Larsen Toubro Ltd. (LT), the nation’s biggest engineering
company, and Oil Natural Gas Corp. (ONGC), the largest explorer, rose
more than 3 percent each. Tata Motors Ltd. (TTMT), the biggest
truckmaker, ended four days of losses. The BSE India Sensitive
Index (SENSEX) added 0.2 percent to 15,988.4 at close.
Indian manufacturing slowed in May, according to a private
survey on June 1, after government data the previous day showed
economic growth slowed to a nine-year low in the March quarter.
The Sensex has fallen 13 percent from its Feb. 21 peak and the
rupee sank 6 percent last month in Asia’s worst performance as
foreign funds turned net sellers for a second month in May.
“I won’t be surprised if the Reserve Bank of India cuts
rates by Friday evening,” Chokkalingam G, chief investment
officer at Centrum Broking Pvt. in Mumbai, told Bloomberg UTV
today. “The government is in a desperate mood to bring back
dollars. They will take more steps to promote foreign investment
out of compulsion.”
India’s economy has been hurt by political gridlock that
has deterred investment, elevated consumer prices and slowing
exports, with gross domestic product growth moderating to a
near-decade low in the March quarter. Brent, the benchmark India
uses, has slid 23 percent this quarter, paring costs for a
nation that imports 80 percent of its oil.
The factors “that are suggesting more room are growth
somewhat lower than expectations, that may have a positive
impact on core inflation,” and a drop in oil prices, RBI Deputy
Governor Subir Gokarn said in Mumbai, reiterating a position he
signaled three days ago.
Bonds Rally
Benchmark bonds advanced for a third day, pushing yields to
the lowest level since April, on speculation the RBI will cut
rates this month to support growth.
The Sensex has advanced 3.5 percent this year. The gauge
trades at 12.5 times estimated earnings, the lowest level in
more than three years, according to data compiled by Bloomberg.
That compares with a multiple of 9.7 times for the MSCI Emerging
Markets Index.
“Valuations are most attractive than they have been for
almost a decade if we keep aside the three months period around
the Lehman Brothers crisis,” Saurabh Mukherjea, director of
institutional equities at Ambit Capital in Mumbai, said in an
interview with Bloomberg UTV. “People are getting depressed
about India and we feel many of the causes of the depression are
misguided. We are advising our clients to buy high-quality names
in this selldown.”
VIX Cools
India VIX, which measures the cost of protection against
losses in the SP CNX Nifty Index, fell 4.4 percent to 25.60.
The Nifty added 0.1 percent to 4,848.15. About 751 million
shares traded on the BSE and NSE on June 1, 17 percent less than
the 12-month daily average.
Larsen Toubro jumped 3.4 percent to 1173.5 rupees, ending
a four-day, 5.8 percent slide. Oil Natural Gas added 3.2
percent to 254.05 rupees. Tata Steel Ltd. (TATA), the biggest producer,
gained 1.5 percent to 404 rupees.
DLF Ltd. (DLFU), the biggest developer, climbed 1.9 percent to 186
rupees, rebounding from an intra-day drop of as much as 7.2
percent. State Bank of India, the nation’s largest lender,
advanced 0.9 percent to 2,045.85 rupees. ICICI Bank Ltd. (ICICIBC), the
second-biggest lender, also rose 0.9 percent to 788.85 rupees.
HDFC Bank Ltd., (HDFCB) the third-biggest lender, climbed 1.1 percent to
495.65 rupees.
Tata Motors increased 1.9 percent to 228.85 rupees, ending
a four-day, 19 percent plunge. The stock is still the best
performer on the Sensex this year. Reliance Industries Ltd. (RIL),
owner of the world’s largest oil-refining complex, gained 1.1
percent to 692.75 rupees, rebounding from a three-year low.
Overseas investors sold a net $112.5 million of domestic
stocks on May 31, reducing their investment this year to $8.5
billion, according to the nation’s market regulator.
To contact the reporter on this story:
Rajhkumar K Shaaw in Mumbai at
rshaaw@bloomberg.net
To contact the editor responsible for this story:
Darren Boey at
dboey@bloomberg.net
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