Mumbai: The benchmark stock index—Sensex—rose the most in Asia amid expectations the central bank may reduce lenders’ reserve requirements to ease a cash crunch.
Larsen and Toubro Ltd, the largest engineering company, advanced 1.7%. Bharti Airtel Ltd, the biggest wireless services provider, paced gains among its peers after the telecom dispute tribunal put on hold a government order telling wireless providers to end some roaming agreements.
Sensex, climbed 232.05, or 1.5%, to 15,970.75 at the 3.30pm close in Mumbai, the biggest gainer among major Asian benchmark indexes. The gauge is still headed for its second-worst annual loss in more than three decades on concern the seven interest-rate increases by the nation’s central bank this year and the rupee’s decline to a record will exacerbate the effects of Europe’s debt crisis on corporate earnings.
“Most investors are expecting a cut in the cash reserve ratio; the surprise could be if it is cut by 50 or 75 basis points,”? said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd in Kochi. Positive data from the US is also helping our markets.
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India’s money-market rates hit a three-year high, fuelling expectations the central bank will cut reserve requirements for the first time since 2009. The rate at which banks lend overnight to one another jumped 428 basis points this year to 9.78% on 23 December, 128 basis points above the central bank’s benchmark rate, data compiled by Bloomberg show. That’s the widest premium since March.
Mint’s Pramit Bhattacharya says that while Indian markets soared on Monday, most analysts are not optimistic.
Standard Chartered Plc and ICICI Securities Primary Dealership Ltd. predict the central bank will cut the ratio by 50 basis points to 5.5% at its policy review next month.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd gained 1.4% to 4,779. The BSE-200 Index rose 1.2% to 1,907.48.
Larsen surged 1.7% to Rs 1,025.95. Tata Consultancy Services Ltd, the largest software maker, added 2.7% to Rs 1,188.4 and its nearest rival Infosys Ltd rallied 3% to Rs 2,775.85. DLF Ltd, the biggest developer, rose 1.3% to Rs 196.55.
Asia’s third-largest economy may grow 7.25% to 7.75% in the financial year ending in March, less than the 9% estimated in February, finance ministry said in a 9 December report as a record run of borrowing-cost increases has curbed consumption. The economy grew 6.9% in the quarter ended 30 September, the least in two years, and factory output fell 5.1% in October, the first contraction since 2009, government data show.
The rupee advanced 0.4% to 52.76 a dollar on Monday, paring this year’s decline to 15%.
Asian stocks climbed to the highest level in almost two weeks as orders for US durable goods and home sales gained, bolstering confidence in the world’s biggest economy and the earnings outlook for Asia’s exporters. The MSCI Asia Pacific Index added 0.3%. Markets from Hong Kong to Singapore, the UK and the US were closed on Monday.
This year’s 22% slide in the Sensex means the 30-stock measure trades at 13.9 times estimated profit, down from 21.5 times in March 2010 and near the lowest level since May 2009. The MSCI Emerging Markets Index is valued at 10.1 times after a 19% drop this year. “We are very near to the bottom,”? Sampath Reddy, who manages $7.1 billion as chief investment officer at Bajaj Allianz Life Insurance Co, told Bloomberg UTV on Monday. ?This is the right time to invest. “We’ve been cutting our cash position by 2-3% every month.”? He didn’t name specific stocks.
Bharti surged 4.3% to Rs 344.75, its highest price since 14 December. Idea Cellular Ltd advanced 4.4% to Rs 82.2 and Reliance Communications Ltd climbed 3.5% to Rs 69.5.
The telecom disputes settlement and appellate tribunal will hear on 3 January the cell-phone operators’ complaint against the government’s halting of 3G roaming services agreements, Bloomberg UTV reported 24 December. Bharti said last week that it was ?shocked? by a department of telecommunications order to end the roaming agreements that permits companies to offer 3G services where they don’t own spectrum.
Reliance Industries Ltd, the nation’s most valuable company, increased 2% to Rs 761, paring this year’s decline to 28%. The government may on Tuesday approve the company’s $1.5 billion investment plan for developing four satellite fields in the KG D6 block, PTI reported, citing sources it didn’t identify. Reliance spokesman Tushar Pania declined to comment. S.K. Srivastava, director general of hydrocarbons, didn’t answer two calls to his mobile phone seeking comment.
Overseas funds sold a net Rs 87.4 crore ($17 million) of Indian stocks on 23 December, increasing their withdrawals from the equities this year to Rs 3,060 crore, according to data from the regulator.
Rakteem Katakey contributed to this story from New Delhi.