India Sensex Rallies as Lenders Surge on Plan to Boost Capital
Here is the opening from this informative article from Bloomberg:
Indian stocks climbed the most in six weeks after the government moved to expand the size of an annual capital injection into state-owned lenders amid an increase in stressed assets.
State Bank of India surged the most since May, while ICICI Bank Ltd., the largest private lender, rose the most in three months after reporting a record quarterly profit. Dr. Reddy’s Laboratories Ltd. climbed to an all-time high after its results beat forecasts, while Hero MotoCorp Ltd., a motorcycle maker, jumped the most in nine months.
The S&P BSE Sensex soared 1.5 percent to 28,114.56 at the close, erasing a weekly and monthly loss. The ministry wants to raise the cash to be injected into lenders in the year to March 31 to 120.1 billion rupees ($1.87 billion), documents tabled in parliament Friday show. Bad debts at state-owned banks climbed to a 13-year high and capital ratios declined, according to central bank data.
“The capital infusion plan as well as hope of a rate cut in Tuesday’s monetary policy meeting” spurred gains in banks, Vaibhav Sanghavi, managing director at Ambit Investment Advisors Pvt. in Mumbai, said by phone.
State Bank soared 5.2 percent, the best performer on the Sensex. Union Bank of India jumped 7.6 percent. United Bank of India rallied 4.5 percent, Oriental Bank of Commerce surged 4.4 percent and Indian Overseas Bank added 4.1 percent.
India’s Sensex Index remains steady within its lengthy consolidation of the 2014 gains. I maintain that it has most likely seen the lows during this medium-term phase and the 200-day (40-week) moving average is rising once again. This is a good overall performance among emerging markets and justifiably so given India’s capable governance and leading growth rate.
The JPMorgan Indian Investment Trust is in a similar position having rebounded in late June with a large weekly key reversal. Moreover, it still sells at a discount of -10.44% to NAV, according to Bloomberg. This remains the largest position in my personal long-term investment account and I would not be surprised to see further significant gains over the next few years. There are more investment trusts (closed-end funds) in the Chart Library for India and other markets.
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