Sensex advances to highest in a month on growth; RIL climbs

Sensex advances to highest in a month on growth; RIL climbs

Mumbai: India’s stocks rose on Monday, driving the benchmark index to its highest level in a month, as investors bought shares in companies that are most likely to benefit from economic expansion.

Also See Boosting Sentiment (Graphics)

Reliance Industries Ltd (RIL), operator of the world’s largest oil processing complex, climbed to its highest in a month after agreeing to take control of Infotel Broadband Services Pvt. Ltd, giving it access to the wireless Internet business.

State-run IDBI Bank Ltd jumped the most in more than four months after the government approved a plan to inject funds to bolster its capital.

“There is a surge in confidence in Indian companies," said Avinash Gupta, an analyst at Bonanza Portfolio Ltd, a New Delhi-based brokerage. “Investors should buy stocks with a view of the next one to three years as the economic fundamentals are very strong." Gupta advises investors to buy shares in financial companies, banks, automobile firms and auto parts makers, while declining to name specific stocks.

The Bombay Stock Exchange’s Sensex gained 273.22 points, or 1.6%, to 17,338.17, its highest close since 3 May after rallying 4.3% in four trading sessions. The S&P CNX Nifty index of the National Stock Exchange rose 1.53%, or 78.35 points, to 5,197.70.

RIL added 1.64% to Rs1,063.40, its highest close since 13 May. It agreed to pay Rs4,800 crore for control of Infotel. The company may spend around $5 billion (Rs23,300 crore) on the venture, including leasing infrastructure such as base stations and optic fibre lines for the broadband service, Alok Deshpande, an analyst with Elara Capital Ltd, said.

RIL, which briefed analysts on 12 June, will also pay Rs12,850 crore for Internet services licences earmarked for Infotel.

Shares of five state-run banks rose after the government approved a plan to inject Rs6,210 crore in capital to help them boost lending. IDBI Bank, which will get Rs3,120 crore, jumped 4.81% to Rs117.75, its biggest gain since 29 January. Bank of Maharashtra, which will receive Rs590 crore, added 4.23% to Rs61.60. The finance ministry announced the plan on 12 June.

Shree Renuka Sugars Ltd advanced 2.06% to Rs64.50. The nation’s biggest refiner of the sweetner will buy 51% of Brazilian sugar and ethanol producer Equipav SA Acucar and Alcool for around Rs1,150 crore, 25% less than it agreed to pay in February, The Economic Times reported, citing a person it didn’t identify. Gautam Watve, Shree Renuka Sugars’ head of corporate strategy and planning, couldn’t be reached for comment.

HCL Technologies Ltd, an information technology company, rose 3.34% to Rs381.00 after signing a five-year Singapore dollar 110 million (Rs370 crore) outsourcing agreement with Singapore Exchange Ltd.

Infosys Technologies Ltd, the nation’s second biggest software exporter, gained 4.32% to Rs2,747.25, while larger rival Tata Consultancy Services Ltd climbed 2.85% to Rs780.50.

Infosys paid Rs275 crore in advance tax for the first quarter compared with Rs230 crore, Bloomberg-UTV reported on Monday. Wipro Ltd, the third largest, added 4.13% to Rs673.60.

Sterlite Industries (India) Ltd, the largest copper producer, gained 2.84% to Rs653.10. Hindalco Industries Ltd, the biggest aluminium producer, rose 2.62% to Rs143.15, its fourth day of gains. Tata Steel Ltd, the No. 1 producer of the alloy, increased 2.40% to Rs484.00.

Copper gained for a fifth day on the London Metal Exchange, where aluminium also advanced.

India’s benchmark wholesale price inflation may slow to 5% by the end of March, Kaushik Basu, chief economic adviser in the finance ministry, said in New Delhi on Monday.

His comment followed a commerce ministry report that showed prices rose by 10.16% in May, faster than the 9.6% median prediction of 24 economists in a Bloomberg survey and the 9.59% pace in the previous month.

The nation’s industrial production grew 17.6% in April, close to December’s record 17.7%, a 11 June government report showed.

Overseas investors bought a net Rs389 crore of Indian stocks on 10 June, increasing total purchases of the equities this year to Rs22,150 crore, according to the nation’s market regulator.

Inflows from overseas had reached a record Rs83,420 crore in 2009, exceeding the high set two years earlier in domestic currency terms, as the biggest rally in 18 years lured foreign funds. They sold a record Rs52,990 crore of shares in 2008, triggering a record annual decline.

Dr Reddy’s Laboratories Ltd (DRL), India’s second largest drug maker, sank 3.72% to Rs1,411.50, its steepest drop in more than four months. The US district court of New Jersey granted a preliminary injunction brought by Sanofi-Aventis SA and Albany Molecular Research Inc. against DRL’s application to market generic Allegra-D24, according to a statement from the Hyderabad-based company.

Hindustan Unilever Ltd (HUL) climbed 1.01% to Rs255.05. HUL, the nation’s biggest household-products maker, said it will spend as much as Rs630 crore buying back shares, its second such action in three years.

Graphics by Yogesh Kumar/Mint