Power stocks, including utilities, helped drive Indian shares higher after the sector regulator released draft tariff regulations for the next five-year period that some analysts said weren’t as negative as the market expected.
The benchmark S&P BSE Sensex climbed 0.9 per cent to 36,270.07 in Mumbai, its highest level since October 1, data compiled by Bloomberg shows. The NSE Nifty 50 Index advanced 0.8 per cent.
Central Electricity Regulatory Commission has proposed keeping a 15.5 per cent return on equity for generator and transmission companies for the five years starting April 1, according to draft tariff regulations dated December 14 and posted on the regulator’s website. The return on equity dilution for companies is lower than what is being factored by current market valuations, Swarnim Maheshwari, Mumbai-based analyst with Edelweiss Securities said. The draft rules allayed fears of a cut, it said. Thirteen of the 19 sectoral indices of the BSE gained, led by gauges of metal and energy shares. “Drop in oil prices, strengthening rupee, and pick up in domestic macros are providing a positive momentum to the market,” said Vinod Nair, head of research, Geojit Financial Services. Foreign, domestic institutional investors were marginal net-sellers on Monday.
Housing Development Finance Corporation (HDFC) and HDFC Bank gave the biggest boosts to the benchmark, while Power Grid Corporation of India was among the top performers on gauge.
Shares of Vedanta rose as much as 6.3 per cent after the National Green Tribunal ordered restart of its copper smelter, which was shut since March. The NSE Volatility Index declined for a fifth day, to close at 14.54, its lowest since September 19.
“With the main event of state elections behind us, investors are focusing on stock-specific action,” said AK Prabhakar, head of research at IDBI Capital Market Services. “Expect metal stocks to do well given the developments in the US-China trade discussions.”
“We expect Nifty to trade in a range as we approach the year-end holiday season and in the absence of any major local or global cues,” said Rupak De, an analyst at Bonanza Portfolio.
Emerging Asian stocks will be the best-performing asset class in 2019, according to institutionalinvestors surveyed by Citigroup Inc. Their preference, pipping US equities as the most-favoured market, makes sense if you anticipate a weaker dollar, strategists told clients. Another sign of appetite for risk in the survey is cash as a share of AUM is holding at 6 per cent -about the same as over the past five quarters.
"Trade protectionism was the largest risk, but half of therespondents thought it would end up generating only limitedimpact," the strategists wrote. Still, "we saw the lowestinclination to commit new cash to equities in more than twoyears, with bonds getting a better bid," they added.
Investors were almost evenly split on whether U.S. stockswill rally 20 percent or tumble 20 percent, the survey of 60mutual fund, pension and hedge-fund clients showed. Fewer than10 percent of respondents expect an American recession in 2019,though a majority sees one coming by 2020.
Developing Asian equities were picked by over a quarter ofinvestors to outperform in 2019, according to the note. U.S.stocks came next, followed by Latin American shares, it said.Health care stocks were the most preferred group onsectoral basis, followed by financials. Consumer discretionaryand real estate shares were least liked, according to the survey.
With inputs from BS reporter