Indian stocks marked their highest close in more than three months on Wednesday, driven by value-buying in beaten-down stocks, while the adoption of a select committee report on a key national tax bill in parliament also helped. The NSE index gained 1.22 percent, while the BSE index ended the day 1.15 percent higher; their highest close since April 16.
Investors reversed losses from the past two sessions awaiting cues from the monsoon session of parliament that is underway where the fate of key reforms on national tax and labour are awaited. A select committee on the Goods and Services Tax (GST) bill presented its report in the upper house of the Indian parliament earlier in the day. "Two days of correction. I think it was overdone and some amount of buying activity at lower levels," Gaurang Shah vice president at Geojit BNP Paribas, said.
Shah said he expected the markets to remain range-bound in the short term unless there was any major development from parliament. Meanwhile Credit Suisse said India's return on equity (ROE) appears to have bottomed at 13.7 percent in March 2015, and has since risen to 14.1 percent. However, a recovery from the current 14.1 percent ROE to 19.8 percent already appears to be priced in.
Bluechips such as Reliance Industries Ltd, up 3.5 percent, and Housing Development Finance Corp, which rose 2.5 percent, helped prop up the Nifty Stocks like Sun Pharma and Hindustan Unilever, which saw heavy selling on the back of earnings on Tuesday, rebounded with gains of more than 3 percent each. However, investors booked profits in stocks like Infosys, which was down 0.6 percent, and Bharti Airtel Ltd, which fell 1.18 percent.