By Bharath Rajeswaran and Hritam Mukherjee
BENGALURU (Reuters) -Indian shares reversed course to trade higher on Monday as heavyweight financials stocks rose and as the impact of U.S. short-seller Hindenburg Research’s fresh report was largely limited to the 10 Adani group stocks.
The NSE Nifty 50 index was up 0.26% at 24,429.55, as of 11:58 a.m IST, and the S&P BSE Sensex added 0.28% to 79,925.36. Both benchmarks were down about 0.6% in intraday trade.
About seven of the 13 major sectors logged gains. The highest-weighted financial services index rose 0.5%.
The buying interest in financials indicates that investors are focussing on safety, especially after the drop early last week, as the sector offers valuation comfort, two analysts said.
HDFC Bank, the heaviest stock on the Nifty 50, rose 1.5% and led gains in the benchmark.
HDFC Bank is our top pick in the banking sector, given its valuations are below historical averages, said analysts at Macquarie, adding that it is among the brokerage’s top conviction ideas across Asia.
Over the weekend, U.S.-based Hindenburg alleged that Madhabi Puri Buch, the head of the Securities and Exchange Board of India, previously held investments in offshore funds also used by the Adani Group. Buch denied the allegations, while SEBI asked investors to remain calm and exercise due diligence.
The Adani group stocks fell between 1% and 4.5%. The two Nifty constituents – Adani Enterprises and Adani Ports – fell about 1.5% each.
The allegations are individualistic and have not managed to dent traders’ confidence in the regulator’s credibility, said two analysts.
Analysts also added that the decline in Adani stocks and pressure on the broader market was unlikely to sustain, and expected the Nifty to hold at the 24,000 levels and recover in a few sessions.
(Reporting by Bharath Rajeswaran and Hritam Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala, Savio D’Souza and Janane Venkatraman)
