India Insight

Markets this month: Tata Motors, M&M top Sensex gainers

By Ankush Arora and Sankalp Phartiyal

The BSE Sensex jumped 2.9 percent in August, the seventh consecutive monthly gain for the benchmark index in 2014. The broader Nifty closed 3 percent higher, its fourth straight month of gains.

A man looks at a screen across the road displaying the election results on the facade of the BSE building in MumbaiThe Indian stock market hit multiple record highs in August, helped by relentless foreign buying, easing of geopolitical tensions and continued optimism about the domestic economy’s revival.

On Friday, India will release GDP growth data for the April-June period. Asia’s third-largest economy likely grew at its fastest in two years in the first quarter of the current fiscal year, a Reuters poll predicted.

But many Indian CEOs say there are no signs yet of economic improvement, even as they are optimistic that Prime Minister Narendra Modi will spur economic growth, according to a poll conducted by the Economic Times newspaper. The survey coincides with 100 days of Modi as India’s premier.

On Sept. 1, the Supreme Court will seal the fate of over 200 coal blocks it declared illegal on Monday.

Markets this week: Cipla, BHEL top Sensex gainers

A man looks at a screen across the road displaying the election results on the facade of the BSE building in MumbaiThe BSE Sensex closed 1.2 percent higher in a week that was marked by two successive record highs for the benchmark.

Prime Minister Narendra Modi’s Independence Day speech and easing wholesale inflation boosted sentiment earlier in the week. Buying of Indian equities by foreign investors and a slide in Brent crude prices to near 14-months lows also helped.

Foreign portfolio investors have poured $12.2 billion in Indian shares this year on hopes the new BJP-led government and the Reserve Bank will revive flagging growth and lower deficit.

Stock market glitches in India over the past few years

India’s stock market, like its peers across the world, is no stranger to sudden trading halts due to technical glitches. On Thursday, India’s second-biggest exchange operator BSE halted trading across all its segments due to a network outage. Trading on the NSE bourse was not affected.

The three-hour outage was the longest in recent memory and follows three earlier outages in a year that has seen stocks scale fresh peaks on expectations of economic revival from a new government.

The BSE, Asia’s oldest stock exchange, has more than 5,000 listed companies. Data from the World Federation of Exchanges shows shares worth $85 trillion were traded on the BSE last year, compared to $479 trillion for the NSE, India’s leading stock exchange.

Markets this week: ITC, Infosys top Sensex losers

By Sankalp Phartiyal and Ankush Arora

Brokers trade on their computer terminals at a stock brokerage firm in Mumbai May 13, 2014. REUTERS/Danish Siddiqui/FilesThe benchmark BSE Sensex fell in three of five sessions this week, as higher crude prices hurt sentiment and the cabinet’s decision to delay a hike in gas prices disappointed investors. Caution also prevailed ahead of the June derivatives’ expiry on Thursday and fears of more violence in Iraq prompted investors to pare positions.

A Reuters poll on Thursday forecast the 30-share Sensex hitting 27,750 points by the end of December, following a brief correction after the budget.

For the week, the BSE Sensex ended 0.02 percent lower. Investors are now awaiting the new government’s first budget on July 10.

Equity funds underperform Sensex for first time since 2008

India’s diversified equity mutual funds rose in 2013 but underperformed the broader markets for the first time in five years, as returns were dampened by the losses in the mid- and small-cap shares as well as financial companies.

These funds gained 4.8 percent on average in 2013, according to data from fund tracker Lipper, delivering lesser annual returns than the benchmark BSE Sensex after 2008.  The Sensex touched life highs in 2013 and ended 9 percent higher, boosted by foreign inflows of more than $20 billion.

Shares of smaller companies, however, underperformed, with the BSE mid-cap index falling 5.7 percent and the small-cap index sliding 11.2 percent. Waqar Naqvi, chief executive at Taurus Mutual Fund, said the sharp fall in mid- and small-cap stocks came as a surprise in 2013.

Markets this week: Sensex gains 1 percent, Tata Power surges over 10 percent

By Ankush Arora and Aditya Kalra

The BSE Sensex ended with gains of 1 percent in the week ending Dec. 6, as investor sentiment was boosted after exit polls indicated the Bharatiya Janata Party (BJP), seen by many as being more business-friendly, will win four of the five state elections conducted recently.

State elections are seen as a semi-final before the national polls next year. Elections are the key theme for the first half of 2014 and the recent rally in the stock market implies that a BJP government is no longer viewed as a low-probability scenario, UBS said this week. The investment bank has set a 2014 target for Nifty at 6,900.

Foreign institutional investors (FIIs) inflows for the year have crossed 1 trillion rupees, regulatory and exchange data showed. They have made net purchases of around $18 billion so far this year, Deutsche Bank figures show.

Equity funds outperform in November; smaller shares rise

India’s diversified equity funds bucked the trend in the broader markets to eke out gains in November, as a strong performance by mid- and small-cap shares and sectors such as capital goods supported unit values.

Data from fund tracker Lipper, a Thomson Reuters company, showed that such funds rose only 0.21 percent on average in the month, but outperformed the 30-share BSE Sensex that fell 1.8 percent.

Mahesh Patil of Birla Sun Life Asset Management cited the outperformance of mid- and small-cap stocks as the “main reason” for positive returns generated by diversified equity funds in November.

Equity mutual funds record best monthly performance since Jan 2012

India’s diversified equity funds posted their best monthly performance since Jan 2012 as the benchmark Sensex scaled record highs in October, with bets on sectors such as banking and capital goods boosting mutual fund returns.

Such schemes, which form the largest category of equity funds in India by number and assets, rose 9.2 percent on average, mirroring returns on the 30-share BSE Sensex, data from fund tracker Lipper, a Thomson Reuters company, showed.

The Sensex hit an all-time closing high in October — and went on to touch a life high on Nov. 1 ahead of the Diwali weekend — bolstered by foreign inflows of around $3.5 billion after the U.S. Fed decided to delay stimulus tapering.

Markets this week: Sensex falls 2.6 percent, Jindal Steel slumps 9 percent

After rising for four consecutive weeks, the BSE Sensex fell 2.6 percent in the last five trading sessions, as a surprise repo rate hike by the Reserve Bank of India (RBI) on Sept. 20 dampened investor confidence and battered banking shares.

Rate-sensitive sectors were hurt — the banking index and the realty index lost over 7 percent in the week. YES Bank fell 14.5 percent, SBI lost 6 percent while shares of DLF slumped 13 percent.

While analysts expected the new RBI chief Raghuram Rajan to hold rates last week, expectations for monetary policy have suddenly shifted towards further tightening after the rate hike, a recent Reuters poll showed.

Sensex loses 3.75 percent in action-packed month

The BSE Sensex lost 3.75 percent in August, its worst monthly performance since February, as worries over foreign outflows were exacerbated by the rupee that fell to record lows.

India’s current account deficit and a struggling economy still worry market participants.  Data showed on Aug. 31 that June quarter GDP grew at 4.4 percent, below analysts’ estimates.

The rupee recovered in the last few trading sessions of the month, closing around 65.75 per dollar after falling to a life low below 68. Still, the unit lost 8.1 percent in August, its biggest monthly fall since at least 1995.

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