(MENAFN- The Peninsula) Most Indian stocks climbed, paced by phone companies and airlines, in the first trading day after the S&P BSE Sensex index capped its biggest annual advance since 2009. Government bonds and the rupee declined.
The Sensex added less than 0.1 percent to 27,507.54 at the close in Mumbai, with about three stocks gaining for every two that retreated on the S&P BSE 500 Index. The India VIX fell 0.6 percent. The rupee weakened 0.5 percent to 63.3550 a dollar, after dropping 2 percent last year. The yield on the 10-year government notes climbed three basis points, or 0.03 percentage point, to 7.88 percent.
The Sensex rallied 30 percent in 2014, the most among the world's 20 biggest markets after China, as foreigners bought $16bn of local stocks on expectations economic growth will rebound after Prime Minister Narendra Modi won the biggest election mandate in 30 years in May. Trading was 62 percent less than the 30-day average, with other major stock markets in Asia closed for New Year's day. "This whole week, volume has been subdued due to the holiday mood," Gaurang Shah, vice president at Geojit BNP Paribas Financial Services Ltd., told Bloomberg TV India. "The market, for today and tomorrow will be sideways and activity will pick up next week. Going forward, the focus is going to be on the earnings season and the government's budget."
Modi's government will announce its first full budget in the last week of February. The economy still faces challenges and policy makers' goal for next year is to boost the manufacturing sector through more investment, Finance Minister Arun Jaitley said in a post on Facebook yesterday.
A further extension of the rally in stocks this year may hinge on Modi's ability to push through reforms after opposition parties stalled the passage of some key bills last month. The Sensex retreated 4.2 percent in December, capping its biggest monthly drop since February 2013.
In 2014, "markets loved Modi," Jayant Manglik, president of retail distribution at Religare Securities Ltd, wrote in an e-mail. "The caveat, of course, is delivery on domestic policy implementation and relative global economic stability."
India's state-run lenders will probably be the focus of a two-day gathering of bank chiefs and regulators as they seek to reverse the companies' lowest profitability rates in at least nine years.
Modi, Reserve Bank of India Governor Raghuram Rajan, Jaitley and heads of government lenders will assemble in Pune, a city near Mumbai, to thrash out policies to help boost earnings and capital ratios, according to Reliance Securities Ltd.
Ten-year bonds reversed early gains on speculation that some of the government's planned share sales in state-run companies may be delayed, restricting the administration's ability to narrow the budget deficit. The rupee's loss yesterday was the biggest since December 16. Global investors sold a net $34.3m of local shares on December 29, paring 2014's inflows to $16bn. The Sensex is valued at 15.1 times projected 12-month earnings, compared with the MSCI Emerging Markets Index's multiple of 11.1, data compiled by Bloomberg show.
Indian telecom companies rallied after the Business Standard newspaper reported the Telecom Regulatory Authority of India has recommended cutting the floor price for a spectrum auction by 22 percent.
Bharti Airtel Ltd., India's largest mobile-phone operator, climbed 2.9 percent, the most in four months. Reliance Communications Ltd., India's second-largest mobile-phone operator, increased 4 percent.
Airline stocks rallied after Indian Oil Corp, the country's biggest state-run refiner, cut jet fuel prices by 13 percent. Jet Airways (India) Ltd., the nation's biggest carrier, surged 9.2 percent, the most since December 8. SpiceJet Ltd., a budget carrier, climbed 4.9 percent.
Developer DB Realty Ltd. jumped 9.7 percent, taking its two-day advance to 32 percent, after the Mumbai High Court ordered Maharashtra coastal zone authority to approve two of the company's projects in the city.
In Pakistan, the benchmark equity index advanced to a record amid suspensions in trading spurred by technical glitches. The KSE 100 Index rose 1.1 percent to 32,489.82 in Karachi. The gauge advanced 27 percent last year, versus a 2.9 percent increase in the MSCI Frontier Markets Index.
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