Mumbai: Indian stocks rose for a third day, taking the benchmark index to its highest level in more than a week, amid expectations domestic spending will boost earnings.
Hindalco Industries Ltd, the biggest aluminum producer, gained the most in two weeks. The Bombay Stock Exchange’s sensitive index, or Sensex, may climb 13% over the next 12 months, buoyed by profit growth, Citigroup Inc. said.
Mahindra and Mahindra Ltd, the largest maker of tractors, paced gains among auto makers after sales climbed in November.
The Sensex gained 328.75, or 1.7%, to 19,850, as of the 3.30pm close in Mumbai on Wednesday.
The S&P CNX Nifty Index on the National Stock Exchange rose 1.7% to 5,960.90. The BSE 200 Index increased 1.9% to 2,498.63.
The markets cheered the good gross domestic product numbers, said Kaushik Dani, a Mumbai-based fund manager with Peerless Mutual Fund, which manages $598 million in assets.
Some of the doubts people had about the economy have been put to rest.
Graphic: Ahmed Raza Khan / Mint
The auto sales numbers show the domestic demand continues to be strong. Dani prefers shares of lenders, car makers and software exporters.
India’s economy expanded 8.9% for a second straight quarter in July to September, a government report showed on Tuesday.
A 9% annual growth rate may be achieved sooner than expected, Kaushik Basu, chief economic adviser to the finance ministry, said.
A measure of India’s manufacturing output stood at 58.4 in November, according to the Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics. A reading over 50 indicates expansion. The gauge was at 57.2 in October.
Hindalco surged 3.5% to Rs213.7, its steepest climb since 18 November.
Its US unit Novelis Inc. said on Tuesday it intends to raise $4 billion in gross proceeds from one or more offerings of senior notes totaling $2.5 billion and a new $1.5 billion secured term loan facility.
JSW Steel Ltd, the third-largest producer of the alloy, surged 7% to Rs1,206.3 after being raised to buy from neutral by Nomura Holdings Inc., which said in a note to investors that value has emerged after a decline in the shares over the past month.
Tata Steel Ltd, the biggest producer of the alloy, jumped 4.9% to Rs613.55, its first gain in five days.
Mahindra, the largest maker of sport-utility vehicles, rallied 4.9% to Rs802.5, its steepest climb since 31 May, after posting an 18% increase in sales last month from a year earlier.
Tata Motors Ltd, the biggest truckmaker and owner of Jaguar Land Rover, added 4.2% to Rs1,286.75, its highest close since 10 November.
TVS Motor Co Ltd, the third-largest motorcycle maker, added 1% to Rs82.55. It said sales surged 29% in November from a year earlier.
“We expect market performance to be earnings-growth driven,” Aditya Narain and other Citigroup analysts wrote in a note on Tuesday that recommended investors buy more banks, auto makers, drug makers telecommunication and energy companies than suggested by fund benchmarks.
Foreign fund inflows have almost doubled this year to an all-time high on the expectation spending will boost corporate earnings.
Overseas investors bought a net Rs272 crore ($59.4 million) of the nation’s shares on 29 November, taking this year’s record inflows to Rs1.312 trillion, according to data on the website of the Securities and Exchange Board of India.