In­dian stocks gain as bud­get deficit plan spurs rate cut bets

The Pak Banker - - MARKETS/SPORTS -

In­dian stocks rose, with the bench­mark gauge re­vers­ing an in­tra­day loss, af­ter the govern­ment's pledge to re­tain a plan to nar­row the bud­get gap spurred op­ti­mism that the cen­tral bank may lower bor­row­ing costs.

State Bank of In­dia and ICICI Bank Ltd., the coun­try's big­gest lenders, were among the best per­form­ers on the S&P BSE Sen­sex. Re­liance In­dus­tries Ltd., owner of the world's largest refining com­plex, climbed to a three-week high. Tata Steel Ltd. rose for a third day and Mahin­dra & Mahin­dra Ltd., a trac­tor maker, ad­vanced to a two-month high. The Sen­sex added 0.5 per­cent at 2:05 p.m. in Mum­bai, eras­ing an in­tra­day loss of 2.9 per­cent. The fis­cal deficit will nar­row as planned to 3.5 per­cent of gross do­mes­tic prod­uct in the year start­ing April 1, the small­est gap since 2008, Fi­nance Min­is­ter Arun Jait­ley told law­mak­ers on Mon­day. The move may help Prime Min­is­ter Naren­dra Modi win an­other rate cut as low global oil prices are fore­cast to keep in­fla­tion near next year's tar­get.

"There's ex­pec­ta­tion that the RBI may now cut in­ter­est rates," Sam­path Reddy, the chief in­vest­ment of­fi­cer at Ba­jaj Al­lianz Life In­sur­ance Co., which has $6.5 bil­lion in as­sets, said by phone. "The fis­cal deficit is one of the most im­por­tant things and it's good that the govern­ment has stuck to the tar­get." Reddy said he re­mains bullish on in­fra­struc­ture stocks.

Cen­tral bank Gov­er­nor Raghu­ram Ra­jan last month warned of higher bond yields if Prime Min­is­ter Modi strayed from the deficit-re­duc­tion path, call­ing macroe­co­nomic sta­bil­ity the na­tion's "sin­gle most im­por­tant strength" in a time of global mar­ket tur­moil.

The Sen­sex has slid 6.6 per­cent in Fe­bru­ary as global funds pulled $2.5 bil­lion from do­mes­tic shares since Jan. 1 amid a wider sell­off in emerg­ing mar­kets.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.