Indian stocks rebounded from a two- month low, mirroring Asian equities, after Federal Reserve Chairman Ben S. Bernanke signaled further monetary stimulus and as business confidence unexpectedly improved in Germany.
Sterlite Industries (India) Ltd. (STLT), the country’s biggest producer of copper and zinc, surged the most in two weeks. DLF Ltd. (DLFU), the largest developer, rallied the most in four weeks. Hindustan Unilever Ltd. (HUVR), the biggest home-products maker, climbed to its highest level this year.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 1.3 percent to 17,280.06, according to preliminary closing prices at 3:30 p.m. in Mumbai after losing 1.8 percent yesterday. The gauge has risen 12 percent this year, poised for its first quarterly advance since December 2010, as foreign funds bought a net $9.1 billion of shares this year on optimism the central bank will cut interest rates to shield growth from Europe’s debt crisis. Emerging-market stock funds took in $782 million in the week ended March 21 for a 12th straight week of flows, according to EPFR Global.
“The first trigger is going to be global liquidity and as long as that remains positive, India will see flows whenever the market goes to an attractive level,” Toral Munshi, head of India equity research at Credit Suisse Wealth Management, told Bloomberg UTV today. “In addition to liquidity, the rate cycle is going to the key trigger for Indian markets.”
Bernanke said monetary policy is still needed to foster a recovery in the world’s biggest economy. A gauge of the German business climate improved, while Chancellor Angela Merkel indicated for the first time she’s prepared to allow an increase in Europe’s debt firewall, easing concerns the crisis may reignite in the region, India’s biggest trading partner.
The MSCI Asia Pacific Index gained 2.1 percent, the most since Dec. 1, to 128.32. The gauge added 12 percent this year, headed for the biggest rally since the third quarter in 2010.
India VIX, which measures the cost of protection against declines in the S&P CNX Nifty (NIFTY) Index Nifty, sank 6.3 percent to 25.05. The Nifty climbed 1.1 percent to 5,243.15 and its April futures traded at 5,310. The BSE 200 Index (BSE200) added 1.1 percent to 2,135.37. A total 1,004 million shares changed hands on the BSE and NSE yesterday, 9 percent more than the daily average in the past 12 months, according to data compiled by Bloomberg.
Foreigners bought a net 3.3 billion rupees of the nation’s stocks on March 22 and March 23, raising investment this year to 450.2 billion rupees, according to the regulator. That’s an all- time high, according to data compiled by Bloomberg.
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