Indian stocks rise after govt’s move on Kashmir, Credit Suisse upgrade

The Centre's move to scrap Article 370, which gives Jammu & Kashmir special status, and Credit Suisse upgrading Indian markets to overweight has boosted stocks.

A man stands in front of an electronic ticker board showing stock information figures outside the Bombay Stock Exchange (BSE) in Mumbai | Photo: Bloomberg

Mumbai: India stocks rose after Credit Suisse AG upgraded the nation to overweight amid an escalating U.S.-China trade war, while the government cemented its position by revoking seven decades of autonomy in the disputed Muslim-majority state of Kashmir.

The S&P BSE Sensex rose 0.4% to 36,843.42 as of 10:10 a.m. in Mumbai. The NSE Nifty 50 Index also climbed 0.5%, paring losses from Monday when it fell more than 10% from its all-time high close on June 3, a retracement seen as a technical correction.

The U.S. slapped a currency-manipulator tag on China after it allowed the yuan to tumble to its weakest level in a decade against the dollar. This comes after Beijing asked state-owned companies to suspend imports of U.S. agricultural products.

Investors may be better off holding South Asia stocks as an escalation in the trade war may lower global interest rates, weaken the yuan and push up the U.S. dollar, Credit Suisse strategists Dan Fineman and Kin Nang Chik wrote in a note Monday.

Further, the action on Kashmir consolidated Indian Prime Minister Narendra Modi’s position as a strongman. The move to make Kashmir a “union territory” — similar to India’s capital New Delhi — gives the government complete control over the state.

Strategist View

• “The Credit Suisse upgrade and an improvement in global indexes have helped sentiment,” said Sameer Kalra, founder of Mumbai-based advisory firm Target Investing. “The action on Kashmir by keeping tension from escalating has been a plus to the market.”
• “We don’t see major upside to the market over the next 6-9 months given the weak outlook from companies. With stress in the financial system, there could be more pain that may come up on the surface in the next couple of months,” he said.

The Numbers

• Seventeen of 19 sector gauges compiled by BSE Ltd. advanced, led by a measure of capital goods companies
• ICICI Bank contributed the most to the index advance, increasing 1.6%; IndusInd Bank had largest gain, rising 1.92%.
• Sensex is still down 1.4% in the past 5 days and down 6.7% in the past 30 days. – Bloomberg