Indian stocks rose, with the benchmark Sensitive Index snapping a three-day, 3.8 per cent decline. Financial companies gained after Goldman Sachs raised its ratings of State Bank of India (SBI) and other lenders.
SBI, the nation’s biggest lender, gained 4.4 per cent. Indian Overseas Bank jumped 4.6 per cent and Punjab National Bank advanced 3.2 per cent. Goldman Sachs said the lenders would benefit from a rebound in the economy.
“Indian economy and the financial sector are returning back to a potential growth path, post a period of adjustment to the intense dislocation in the global economic environment,” analysts led by Sampath S K Kumar at Goldman Sachs said in a note to clients today.
Reliance Industries, the country’s most valuable company, fell 1.6 per cent, extending yesterday’s 7.8 per cent drop, after its stock rating was downgraded by Kotak Securities, saying a court ruling yesterday could dent earnings.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, added 82.39 points, or 0.6 per cent, to 14,957.91. It had fallen as much as 1.7 per cent earlier. The S&P CNX Nifty Index of the National Stock Exchange gained 0.8 per cent to 4,517.80. The BSE 200 Index rose 1.2 per cent to 1,829.27.
SBI rose 4.4 per cent to Rs 1,714.35, Indian Overseas surged 4.6 per cent to Rs 85.65 and Punjab National Bank jumped 3.2 per cent to Rs 630.85.
SBI and Indian Overseas Bank were raised to “buy” from “neutral,” while Punjab National Bank was upgraded to “buy” from “sell,” Goldman Sachs said in a report today. SBI was also added to the brokerage’s “conviction list,” while Bank of Baroda was raised to “neutral” from “sell.”
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Gas-price ruling
Reliance fell for a second day, losing 1.6 per cent to Rs 2,143.35. The stock’s rating was cut to “sell” at Kotak Securities, which cited an “unfavorable” gas-price ruling by the Bombay High Court. Reliance’s price estimate was cut 5.7 per cent to Rs 1,650. The court yesterday ordered the fuels explorer to sell natural gas at 44 per cent less than the government-set price.
“We are seeing a rotation in sectors with investors now moving out of the commodity space and into areas such as financial services again,” said Shashank Khade, who helps manage $300 million in assets at Kotak Securities in Mumbai. Overseas funds bought a net Rs 519 crore rupees of Indian stocks on June 12, according to the nation’s stock market regulator.