Sensex at Four-Month High Despite India Overtaking Russia for Third Biggest Tally of Virus Cases

Photographer: Dhiraj Singh/Bloomberg

Indian stocks rose after a volatile start as the central bank’s new monetary policy committee began meeting ahead of a decision later this week.

The S&P BSE Sensex advanced 0.8% to 39,871.03 as of 10:47 a.m. in Mumbai, after slipping as much as 0.3%. The NSE Nifty 50 Index added 0.4%. Gains were driven by India’s most valuable company, Reliance Industries Ltd., which said it will get a $750 million investment in its retail unit.

The interest rate decision due on Friday is likely to see borrowing costs held at a record low as inflation remains elevated, potentially benefiting lenders’ net interest margins. Meanwhile, signs of economic revival may bode well for consumer spending as India heads into its seasonal festive season.

“If we get more liquidity, whether directly or indirectly from the RBI, it could lead to a rally in financial stocks,” said Abhimanyu Sofat, head of research at IIFL Securities Ltd. in Mumbai.

The yield on the benchmark 10-year government bond fell by one basis point to 6.02%, while the rupee weakened 0.1% to 73.5350 against the U.S. dollar.

Read: A Surprisingly Dovish RBI Could Undermine Indian Rupee

Tata Consultancy Services Ltd. is scheduled to kick of the quarterly earnings season with its results today, with investors watching for commentary on global demand, new deals and a share buy-back proposal.

Read: India’s IT Firms Set to Post Strong Earnings on Demand Revival

The Numbers

  • Ten of 19 sector sub-indexes compiled by BSE Ltd. rose, led by a group of energy companies, while the rest declined.
  • As many Sensex shares gained as those that rose; Bajaj Finance Ltd. fell the most, with a 4.2% drop, and was the biggest drag on the gauge.

Volatility in emerging market currencies will not let up in the next six months as U.S. presidential election jitters mount and domestic economic growth tapers off, a Reuters poll of market strategists showed.

Most emerging market currencies were forecast to weaken or at best cling to a range over the next three to six months but will rise about 2% on average in a year, supported by a weaker dollar, the Sept. 28-Oct. 5 poll found.

Reuters surveys since the global shutdown in activity in March have been consistently concluding emerging market currencies will not recoup even half their coronavirus-induced 2020 losses within a year.

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Still, a steep dollar selloff, which just posted its worst quarter in three years as expectations for a swift recovery from the COVID-19 recession made investors exit safe havens, has helped currencies in less developed countries rise. That comes despite deep economic troubles from the pandemic.

Volatility in emerging market currencies will not let up in the next six months as U.S. presidential election jitters mount and domestic economic growth tapers off, a Reuters poll of market strategists showed. (iStock)

“EM currencies are running on empty without capital inflows or a resounding macro narrative. The large output gap and lower level of economic activity will have a disproportionately negative impact on currencies,” said Jason Daw, head of emerging markets strategy at Societe Generale.

“EM FX has tended to weaken in the lead up to and for several months after a challenger victory in the contest for the White House. A Democratic sweep, our central scenario, could result in weaker EM currencies.”

A Reuters/Ipsos poll on Sunday found 51% of voters were backing