Indian equities gain as economic data improves

Indian stocks resumed gains after snapping a five-day winning streak on Wednesday as the quarterly earnings season starts amid signs of a revival in economic growth.

The S&P BSE Sensex added 1.1% to 36,737.69, while the NSE Nifty 50 Index advanced by 1%. Both measures are close to breaching technical barriers that some investors read as signals to sell.

Investors have discounted quarterly earnings numbers, and “any surprise would be on the positive side and stock specific because expectations are so low,” said Shrikant Chouhan, a technical analyst at Kotak Securities Ltd. “We may see a short-term pause in the market, with a brief correction.”

The Sensex and Nifty indexes breached 70 on their 14day relative strength measures earlier this week, which some analysts consider a sign that they are overbought.

Both gauges have also been testing their 200-day moving averages, seen as technical barriers to further gains.

Profit-taking led to a 95% slump in inflows to equity mutual funds last month.

Local economic data and global risk appetite are improving, according to Jefferies Financial Group Inc, with analysts suggesting any dip after a 40% rebound in the Sensex from a low in March will be short lived.

Citigroup estimates Indian companies under its cover will show a 46% drop year-onyear in quarterly earnings.

Tata Consultancy Services Ltd, Asia’s largest software exporter, reports earnings later yesterday. While business is gradually reopening from a prolonged lockdown, India’s coronavirus epidemic has become the third biggest in the world as infections surged after containment was eased.

The yield on the benchmark 10-year government bond slipped to 5.77%, its lowest close in a month, while the rupee closed little changed at 74.9950 per US dollar.

The Numbers Fifteen of 19 sector sub-indexes compiled by BSE Ltd gained, led by a gauge of metal companies. Twenty-two Sensex shares rose while eight fell. Reliance Industries Ltd contributed the most to the index advance, rising 1.5%, while Bajaj Finance Ltd was the biggest winner, climbing 3.9%