(MENAFN- Gulf Times) Indian stocks fluctuated as software exporters and automobile stocks advanced before the central bank's policy review today, countering losses in energy and telecom companies.
Infosys, the second-largest software exporter, climbed to a two-week high. Mahindra & Mahindra, a tractor producer, was the best performer on an index of automakers, which rallied to a three-month high. Coal India, the world's largest miner of the fuel, and Sun Pharmaceutical Industries, India's most valuable drugmaker, fell more than 1% each.
The S&P BSE Sensex rose less than 0.1% to 26,145.67 at the close, after changing direction at least 20 times. The gauge posted a second weekly gain on Friday amid optimism the government will be successful in pushing through the parliament a bill for a nationwide sales tax, a proposal that's been repeatedly blocked by opposition parties. Asian stocks fell 1%, while the Shanghai Composite Index added 0.3% at the close after slumping as much 3.2%.
"The momentum is positive on optimism about the goods-and- services tax bill, but weak Asian markets are not giving confidence," Alex Mathews, the head of research at Geojit BNP Paribas Financial Services Ltd, said by phone from the southern state of Kerala. "Automakers are rallying as they are likely to report good sales numbers for the festive season."
Reserve Bank of India Governor Raghuram Rajan will leave the repurchase rate unchanged after paring it 125 basis points in 2015, according to a Bloomberg survey of economists. A report Monday will probably show Asia's third-largest economy expanded 7.3% last quarter, according to a Bloomberg survey.
Infosys climbed 2% in a third day of gains. Mahindra & Mahindra rose 1.1%, taking this month's rise to 15%, the second-best performance on the Sensex. Tata Motors, owner of Jaguar Land Rover, extended last week's 3.7% advance. The stock has soared 42% since October 1.
Bajaj Auto, a motorcycle maker, rose 1.3%, the most since November 23. Automakers will report November sales data today. Coal India fell 1.8% to its lowest level since November 11. Sun Pharmaceutical and rival Lupin lost 1.4%.
Bharti Airtel, India's largest mobile-phone operator, tumbled the most since November 5 and was the worst performer on the Sensex. India's top wireless carrier plans Rs600bn ($9bn) investment to improve voice and data quality, Chief Executive Officer Gopal Vittal said in a statement yesterday.
The Sensex retreated 1.9% this month, the most since August, as foreigners pulled$793mn, the biggest monthly withdrawal since September. The index is down 4.9% for the year and trades at 15.5 times its projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.
Meanwhile the rupee led losses in Asia in November as outflows from local bonds and equities climbed amid increased prospects of a rise in US interest rates this year.
Investor sentiment soured as Prime Minister Narendra Modi's party lost an election in the key state of Bihar, which makes it harder for his government to push through financial reforms to boost the economy. Foreign holdings of rupee-denominated debt fell Rs40.6bn ($609mn) this month, the most since May, data from the National Securities Depository show. Stocks have seen withdrawals of about $793mn.
The rupee declined 2.1% in November to 66.6675 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The currency rose 0.1% yesterday after falling to as low as 66.8850 on Friday, the weakest level since September 2013.
"The defeat in the Bihar state elections was seen as a setback by foreign investors, whose reaction was to reduce their exposure to Indian assets," said Khoon Goh, a senior foreign- exchange strategist at Australia & New Zealand Banking Group in Singapore. "The stronger dollar environment on expectations of Federal Reserve rate hikes also led to the weakening in the rupee."
Futures contracts indicate there is a 76% chance the US central bank will act at its December 15-16 meeting, a move that will reduce the allure of emerging-market assets. The odds were at about 50% at the end of October. Indian sovereign bonds posted a second straight month of losses, with the yield on the securities due May 2025 rising 15 basis points from October 30 and two basis points to 7.79%, according to prices from the central bank's trading system.
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