BackSensex advances to two-week high paced by bank shares
Indian stocks climbed before the release of monthly inflation and industrial output data as optimism grew over the progress of economic bills in Parliament
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Mumbai: Indian stocks climbed before the release of monthly inflation and industrial output data as optimism grew over the progress of economic bills in Parliament.
ICICI Bank Ltd, State Bank of India and HDFC Bank Ltd rose at least 1%. Dr Reddy’s Laboratories Ltd was the top gainer on the S&P BSE Sensex. Asian Paints Ltd jumped to a record after its group sales beat analyst estimates Wednesday. Tata Consultancy Services Ltd added 1.96%.
The Sensex index increased 0.8%, or 193.20 points, to 25,790.22, the highest since 27 April. Industrial production may have expanded 2.5% from a year earlier in March, compared with a 2% gain in February, a Bloomberg survey of economists showed before government data due Thursday. India’s Parliament passed a bill on Wednesday to overhaul archaic insolvency laws, taking Prime Minister Narendra Modi a step closer to fulfilling his pledge to make it easier to do business in the world’s fastest-growing major economy.
“Quarterly earnings are signaling an uptick in industrial demand," Jitendra Panda, chief executive officer at Peerless Securities Ltd, said by phone from Kolkata. “Bank stocks are up after the bankruptcy legislation was passed by parliament. Investors are finding value in beaten down drugmakers and utilities."
The bill’s passage gives Modi a political victory after opponents blocked several other pieces of legislation, including a national sales tax. It’s also one of the biggest steps in India’s battle to clean up $117 billion of stressed assets. The inability to shut loss-making companies and collect dues had locked up funds at banks and damped lending and investment.
Consumer prices may have risen 5.05% from a year earlier in April, from 4.83% in March, a Bloomberg survey showed.
Earnings are also recovering after the worst run since the global financial crisis. Eight of 15 Sensex firms that have posted March quarter results have beaten or matched estimates.
Dr Reddy’s reported group net income of ₹ 74.6 crore after accounting for a ₹ 431 crore charge related to its Venezuela operations. That compares with the ₹ 560 crore estimate of 20 analysts in a Bloomberg News survey.
Foreign investors bought $58 million of local stocks on 10 May, taking this year’s inflows to $1.8 billion. They invested $585 million last month after an inflow of $4.1 billion in March, which was the highest in three years.
The Sensex has lost 1.3% this year and trades at 15.9 times 12-month projected earnings versus 11.4 for the MSCI Emerging Markets Index. Bloomberg
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