India’s benchmark Sensex rose for a second day after China cut interest rates, leading to a spike in Asian equity markets. Stocks of drug makers and metal producers led on the domestic front.
The Sensex was up 273 points at 10.30 am in Mumbai. Hindalco Industries Ltd., Cipla, and Hero MotoCorp all advanced. Lupin, HUL, Ambuja Cements, HDFC Bank, Wipro and ITC were among stocks that lagged.
The gains came after the Sensex shed over 10 percent on Thursday to close at its lowest level in almost a year. “Indian markets are looking up after a sharp fall,” Paras Bothra, vice president of equity research at Ashika Stock Broking Ltd., said by phone in Mumbai. “The China rate cut will be positive for sentiments.”
China's central bank on Sunday cut rates by 25 basis points - after two similar moves since November - as it looks to support the world's number two economy, which grew last year at its slowest pace since 1990.
An inflation report due Tuesday may boost expectations of a cut in local interest rates. Indian central bank Governor Raghuram Rajan refrained from lowering borrowing costs at a scheduled review April 7 as he waited for commercial lenders to pass on two previous cuts to customers. He said his next move would depend on data showing the balance of risks to inflation, which he’s mandated to keep below 6 percent by January.
International investors sold a net $202.5 million of local stocks on May 7, extending outflows that began on April 22. The withdrawal pared this year’s inflows to $6.7 billion.
The benchmark gauge of Indian option prices declined for a third day after foreigners sold stocks for a 10th day amid concern earnings growth will slow. The India VIX Index fell 0.5 percent to 19.01, data compiled by Bloomberg show.
(With agency inputs)