Stocks reverse losses in late trade as industrials gain

Stocks advanced, with the benchmark gauge erasing losses in the last hour of trade, as engineering companies and automakers climbed.

Bharat Heavy Electricals, the nation's biggest power-equipment maker, was the best performer on the S&P BSE Sensex. Larsen & Toubro rose for a fifth day, the longest run in five months. Mahindra & Mahindra, the largest sports utility-vehicle maker, and Hero MotoCorp increased more than two per cent each.

The Sensex added 0.2 per cent at the close in Mumbai, reversing an intra-day drop of 0.8 per cent. Global funds have bought $2.4 billion of shares since March 1, putting the index on course for its best month since January 2012, after Finance Minister Arun Jaitley in his February 29 budget pledged to further cut the fiscal deficit and boost rural spending.

"Foreigners have been on a buying spree since the budget day and every small, intra-day fall is being bought into," Kaushik Dani, a fund manager at Karvy Stock Broking in Mumbai, said by phone. "There's a lot of strength in the market."

The Sensex on Monday climbed above its 100-Day Moving Average for the first time since October as speculation mounted that the Reserve Bank of India (RBI) will lower borrowing costs after the government cut interest rates on small savings plans.

The monetary authority will review its policy rates on April 5.

"A 25-basis point cut has been factored in; traders are speculating if RBI will lower borrowing costs by 50 basis points," said Dani. "That's leading to buying in financials, capital goods and auto segments."

Bharat Heavy Electricals rallied 4.2 per cent to take this month's jump to 28.5 per cent, the most on the Sensex. It lost 36 per cent of its value last month. Tata Steel, the biggest producer of the alloy, climbed to a 10-month high. The stock has rallied 24 per cent since March 1, heading for its best month since August 2013.

Mahindra & Mahindra, largest maker of sport-utility vehicles and tractors gained, 2.1 per cent in a third day of advance. Hero MotoCorp, the biggest maker of motorcycles, rose 2.2 per cent to its highest level since January 15, 2015. Bosch, a manufacturer of automotive parts, surged to its highest level since November 5.

Reliance Industries, owner of the world's largest refining complex, capped its biggest winning run in six years after its stock-target price was increased 17 per cent at Sanford C Bernstein & Co. The shares rose one per cent in an eighth day of gain, the longest period since March 2010.