India’s Sensex Heads for Best Week Since 2016 :Chakri Lokapriya MD, TCG AMC

Indian shares headed for their best week since May 2016 amid earnings and as tensions eased between the government and the central bank over the monetary authority’s independence. An overnight drop in the price of crude also boosted sentiment.

The benchmark S&P BSE Sensex climbed 1.2 percent to 34,841.20 as of 9:36 a.m. in Mumbai, extending its weekly advance to 4.7 percent. Asian Paints Ltd. — where oil and crude derivatives constitute a major portion of input costs — paced the rally, rising 5.3 percent. All 19 sub-indexes compiled by BSE Ltd. advanced, led by a gauge of automobile stocks. Most stocks in Asia advanced Friday, building on a rally in global equities after what was their worst month in more than six years.

The Sensex and the NSE Nifty 50 Index, also up 1.2 percent, look to exit a so-called technical correction from their all-time highest closes on Aug. 28 as a drop in crude prices eases strain on the trade account, boosting the outlook for economic growth and corporate profits in a nation that imports more than 80 percent of its oil needs.

 “The violence of crude moves over the last month has led to a significant correction of India’s stock prices making them attractive currently, as long as oil does not go back up fast,” said Chakri Lokapriya, chief investment officer at TCG Asset Management. The fall in the price of oil is “a huge positive for India’s deficits and inflation.”
India’s government earlier this week sought to defuse a spat with the central bank over the monetary authority’s independence in handling bank regulation, bad loans and a liquidity squeeze. Of the 34 NSE Nifty 50 Index companies that have announced results so far, 19 have either met or exceeded profit estimates.