Indian stocks rose after the government approved an increase in salaries for civil servants, spurring optimism the payout will bolster consumption
Mumbai: Indian stocks advanced to a one-week high after the government approved an increase in salaries for civil servants, spurring optimism the payout will bolster consumption that has been the key driver of the nation’s world-beating growth.
Automakers Hero MotoCorp Ltd and Tata Motors Ltd were the best performers on the S&P BSE Sensex, while Asian Paints Ltd climbed the most in a month. Tata Metaliks Ltd rose the most in two weeks, and state-run iron ore miner NMDC Ltd climbed to a seven-week high after the government approved a new mineral exploration policy. Property developer DLF Ltd jumped the most in four months after its billionaire founder brought shares.
The Sensex rose 0.81%, or 215.84 points, at 26,740.39, paring its loss since the Brexit vote to less than 1%. The stimulus from higher government wages comes at a time when a revival in company earnings, improving economic data and prospects of above-normal rainfall have put the gauge on course for its first quarterly advance in more than a year.
“Brexit is getting priced in with each passing day," Ashish Kukreja, chief executive officer at Mumbai-based Craft Financial Advisors Pvt. Ltd, said by phone from Mumbai. “The focus is now on the monsoon, June-quarter earnings, the Pay Commission’s award and the monsoon session of Parliament where the GST (Goods and Services Tax) bill is likely to be cleared. We are very positive on the markets."
The Sensex also tracked global equities, which rose for a second day amid speculation that policy makers will mitigate the damage of the Brexit vote, including a pause in the Federal Reserve’s tightening cycle. The MSCI All-Country World Index rose 1% at 12.30pm in London and the Stoxx Europe 600 Index climbed 2.4%. The equity gauge has recouped 5% after tumbling 11% over two days after the vote.
A panel last year had recommended a 24% raise for bureaucrats and other staff, a total payout of roughly ₹ 1 trillion ($15 billion) to 4.7 million workers and 5.2 million pensioners.
The government would seek to pass a constitutional amendment authorizing the goods-and-services tax, known as GST, in the monsoon session of Parliament starting 18 July, parliamentary affairs minister Venkaiah Naidu said in New Delhi. The tax is the nation’s biggest economic reforms in decades.
Hero MotoCorp jumped 3.95%, the most since 2 March, ending four days of losses. Maruti Suzuki India Ltd added 1.36% in a second day of advance and Asian Paints gained the most since 1 June.
Tata Metaliks surged 5%, taking this month’s rally to 49%. NMDC added 1.91%. Sandur Manganese and Iron Ores Ltd advanced the most in a month and Ashapura Minechem Ltd surged 8.22%, the most in four months.
DLF soared 7.83% to its highest level since April 2015. Founder and chairman Kushal Pal Singh and his family will sell stake in a unit, clear debt and buy ₹ 10,000 crore of the company’s shares, the Economic Times reported without saying where it obtained the information.
Indian restaurant chains rallied after the government approved the so-called model shop and establishment bill that allows 24-hour operations through the year.
Speciality Restaurants Ltd climbed 5.3% to its highest level since 25 May. Jubilant Foodworks Ltd, the local partner for Dunkin’ Donut Inc. and Dunkin’ Donut Inc., rose 3.78% and Westlife Development Ltd, which runs McDonald’s restaurants in western and southern India, jumped 6.8%.
“India’s rising young population is expected to stoke demand for hotels that stay open round-the-clock," Jagannadham Thunuguntla, head of fundamental research at Karvy Stock Broking Ltd, said by phone from Hyderabad.
Overseas funds sold $32 million of local shares on Tuesday. They have still invested $530 million in Indian equities in June, set for the fourth month of purchases. That’s helped the Sensex climb 5.5% since 1 April, poised for the first quarterly gain since the period ended March 2015, data compiled by Bloomberg show. Bloomberg