ADR Report-Indian stocks jump on earnings outlook

NEW YORK, April 13 Wed Apr 13, 2011 5:06pm EDT

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NEW YORK, April 13 (Reuters) - Indian shares traded in the United States rose sharply on Wednesday as the local market broke a five-day losing streak and investors remained bullish about the earnings outlook.

Indian banking stocks were among top gainers. ICICI Bank (IBN.N) rose 3.6 percent to $50.25, while HDFC Bank (HDB.N) gained 3 percent to $173.82, helping the BKNY index of Indian ADRs .BKIN rise 2.4 percent.

Simon Hallett, chief investment officer at Harding Loevner in New Jersey, said interest rate tightening India may be coming to end and inflationary pressure could be easing -- a positive for banking stocks.

"When the cost of funds goes up for the Indian banks, which have large deposit bases, there tends to be some pressure on margins but it's relatively short term," he said. "So long as the tightening doesn't continue, eventually their loans will re-price and it catches up."

Harding Loevner manages $11.7 billion in non-U.S. equities. Among Indian banks they own ICICI and HDFC in a mixture of ADRs and domestic stocks.

There were gains across other Indian ADRs. Tata Motors (TTM.N), India's largest automobile company, rose 3.7 percent to $28.06, while Infosys Technologies INFY.O rose 1.7 percent to $72.99.

Indian shares outpaced the wider market. The BNY Mellon index of leading American Depositary Receipts (ADRs) .BKADR rose 0.4 percent while the U.S. benchmark S&P 500 index .SPX edged up 0.02 percent.

There was weakness in Latin American shares, driven largely by Brazilian resource companies, including Petrobras (PBR.N) and miner Vale (VALE.N). Petrobras fell 2.6 percent to $37.20, while Vale fell 1.8 percent to $32.39.

A bearish moving average convergence divergence, or MACD, pointed to downward momentum for Brazil's Bovespa index. The index has fallen below several simple moving averages, including its 14-, 50-, 100- and 200-session averages.

Among Far Eastern shares Honda Motor Co (HMC.N) and other Japanese automakers posted strong gains after Nomura Securities said it expected a sharp post-earthquake recovery in the second-half of the business year.

Honda's shares rose 3.3 percent to $35.05 in New York, while the BKNY Mellon index of Japanese ADRs rose 1.2 percent. (Editing by Leslie Adler)

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