Sensex, Nifty Reverse Gains After Five-Week Rally on Poll Bets
Rally Continues in India's Equities on Elections, Earnings Bets
(Bloomberg) -- Key Indian equity indexes reversed gains as some investors said a recent rally, largely driven on bets that the government will get another five-year term, may be too fast, too soon. Gauges of mid- and small-sized companies gained.
The benchmark S&P BSE Sensex closed 0.3 percent lower at 38,132.88 in Mumbai, reversing a gain of as much as 0.6 percent earlier today. The NSE Nifty 50 Index also retreated by the same magnitude. The gauges have risen five straight weeks through Friday, their best weekly winning streak in more than six months.
Foreign funds have pumped in more than $6 billion into Indian stocks this year on optimism of a revival in company earnings, continued low interest rates and the reinstatement of the incumbent national government. Investors are keen to see more indications if the rally has been overdone or there’s room for further gains.
- “Investors are assuming a significantly higher probability of the current government getting another term, and this coupled with a catch-up rally with EM rivals, is boosting equities,” said Vivek Ranjan Misra, head of fundamental research at Karvy Stock Broking Ltd. in Hyderabad. “The fast-pace catch-up is probably over and volatility will remain higher ahead of the elections.”
- Poll outcome, company earnings and fears of a global recession will be the factors that will direct the markets from here, Misra said. He expects the Nifty to rise to 14,000 by the end of 2019.
- Thirteen of the 19 sector indexes compiled by BSE Ltd. fell, led by a gauge of utility stocks.
- Twenty-one of the 31 Sensex members and 35 of the 50 Nifty stocks dropped. State-owned refiner Hindustan Petroleum Corp.’s 2.8 percent decline was the steepest among Nifty members, halting a two-day gain.
- The S&P BSE MidCap and S&P BSE SmallCap indexes gained 0.6 percent each, extending their advance to a second day.
- ICICI Prudential Life Insurance Co. jumped 9 percent, the most since its listing in September 2016, after Prudential Corp.’s offer to sell some stake got oversubscribed by institutional investors.
- Property developer Unitech Ltd. climbed 8.3 percent, its first gain in 10 days, after it signed a pact to sell power transmission unit.
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