Mumbai: Indian stocks climbed for a sixth straight day, extending the biggest weekly rally in 20 months, as a decline in oil prices for a fourth day allayed concerns energy costs will fan inflation.
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HeroHonda Motors Ltd, the nation’s biggest motorcycle maker, jumped 3.02% as its founder got approval to raise funds from overseas. Bharti Airtel Ltd jumped to near a six-month high. JPMorgan Chase and Co. raised its rating on the stock to “overweight” from “neutral” on Monday. Oil and Natural Gas Corp. Ltd, the largest state explorer, advanced 1.4% as it won 10 fields in the nation’s ninth auction of energy assets.
“The decline in crude prices, which has been accompanied by an appreciation in the Indian rupee, bodes well for the government’s import bill,” said Gurunath Mudlapur, director at Atherstone Capital Markets Ltd, an investment bank in Mumbai. “Fresh buying by foreign funds near the end of the quarter has also spurred gains for stocks.” He recommends shares of large capitalization auto and capital goods companies.
The Bombay Stock Exchange’s (BSE) sensitive index, or Sensex, gained 177.66 points, or 0.9%, to 19,120.80, the highest level since 24 January. The S&P CNX Nifty on the National Stock Exchange rose 0.9% to 5,736.35. The BSE-200 Index added 0.8% to 2,341.59, its best close since 25 January.
Overseas investors bought a net Rs1,520 crore ($340 million) of Indian stocks on 25 March, a fourth straight day of purchases, reducing their outflow from equities this year to Rs5,530 crore, according to the website of the Securities and Exchange Board of India.
Indian shares, Asia’s second worst performers this year, may rally after indices crossed their 200-day moving averages, according to Angel Broking Ltd. The Nifty surpassed its 200-day moving average of 5,691 as of Monday’s close, while the Sensex topped the average of 18,959.
“The Nifty is likely to target 5,800 and 5,850 in the breakout (in) near term,” Vasudeo Mileen Kamlakant, a technical analyst at Angel Broking in Mumbai, said by telephone.
Hero Honda paced gains among auto stocks, climbing 2.9% to Rs1,544.6, its highest close since 7 February. The government approved Hero Investments Pvt. Ltd’s proposal to raise Rs4,500 crore from overseas investors.
Maruti Suzuki India Ltd (MSIL), the largest car maker, gained 3.12% to Rs1,239.25, while Tata Motors Ltd, the biggest truck maker, added 1.55% to Rs1,239.20.
Bharti Airtel rose for a sixth day, jumping 3.36% to Rs359.50, its highest close since 1 October. Smaller rival Reliance Communications Ltd rallied 4.18% to Rs109.60, a three-week high. Oil and Natural Gas advanced 1.4% to Rs283.10, its highest close since 7 February.
The Sensex jumped 5.2% last week, the most since the five days ended 17 July, 2009. Still, the gauge is set for its first quarterly decline in nine as concerns that rising interest rates will crimp economic growth and corporate profits dragged stocks lower.
Companies on the benchmark trade at an average 18 times estimated earnings, compared with 21.5 times in March 2010, after the measure dropped 7% this year, according to Bloomberg data.
India’s currency strengthened against the dollar. The rupee rose 0.1% to 44.77 per dollar on Tuesday. It touched 44.61 on 25 March, the strongest level seen since 4 January.
India faces a challenge in managing the impact of rising oil prices on its economic growth and inflation, Reserve Bank of India governor D. Subbarao said on Tuesday. The nation imports about 75% of its energy needs.
Subbarao raised borrowing costs eight times in the past year, as he seeks to combat inflation that accelerated to 8.31% in February, cutting the country’s purchasing power. The finance ministry forecasts the $1.3 trillion economy may expand as much as 9.25% in the fiscal starting 1 April.
India’s economic expansion and corporate earnings lured foreign investors to purchase a record $29.4 billion of local equities last year and made the Sensex the best performer and most expensive among the world’s 10 biggest markets
Graphic by Ahmed Raza Khan/Mint