Stocks, Rupee Reverse Gains as Modi Victory Rally Evaporates
Added 05-23-19 07:04:02am EST - “Indian equities declined and the rupee weakened as investors sold the rally triggered by Prime Minister Narendra Modi's second landslide victory, an outcome that was partly priced in after exit polls this week. The Sensex fell 0.8%…” - Finance.yahoo.com
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Indian equities declined and the rupee weakened as investors sold the rally triggered by Prime Minister Narendra Modi’s second landslide victory, an outcome that was partly priced in after exit polls this week.
The Sensex fell 0.8% at the close in Mumbai, erasing a gain of as much as 2.6% that lifted the gauge above 40,000 for the first time. The NSE Nifty 50 Index lost 0.7% after briefly rising above the 12,000 mark. The rupee gave up gains of as much as 0.4%, while the yield on benchmark 2029 bonds dropped three basis points.
Modi’s commanding lead has allayed concerns about a coalition of opposition parties forming the government when investors are already wrestling with slowing economic activity and the U.S.-China trade tensions. Even so, today’s rally stretched valuations that are already rich relative to other emerging markets, analysts said.
“Forward multiples are demanding and when viewed against the backdrop of a slowing economy and earnings undershoot, they limit the market’s upside,” Sriyan Pietersz, an investment strategist at Matthews Asia in Singapore, said in an e-mail.
Foreign funds have purchased $9.5 billion of local shares this year, the most after China, while rupee bonds have seen outflows of $447 million. The MSCI gauge of Indian stocks trades at nearly 18 times its estimated 12-month estimated earnings, 56% higher than a similar index of emerging market rivals, according to data compiled by Bloomberg.
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