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Business News/ Market / Stock-market-news/  Sensex, Nifty advance to erase weekly decline as BOE cuts rates
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Sensex, Nifty advance to erase weekly decline as BOE cuts rates

Indian stocks rose, with the benchmark gauge erasing a weekly loss in the final hour of trade, as global shares rallied after the Bank of England eased policy

The Sensex surged 1.3% at the close, with the bulk of the gains coming after the European markets opened. Photo: Hemant Mishra/MintPremium
The Sensex surged 1.3% at the close, with the bulk of the gains coming after the European markets opened
. Photo: Hemant Mishra/Mint

Mumbai: Indian stocks rose, with the benchmark gauge erasing a weekly loss in the final hour of trade, as global shares rallied after the Bank of England eased policy in the latest move to bolster growth.

Automakers Hero MotoCorp Ltd and Bajaj Auto Ltd jumped to records. Axis Bank Ltd and State Bank of India (SBI) were among the best performers on the S&P BSE Sensex. Tata Steel Ltd paced gains among steelmakers after the government extended the minimum import price regime. Tata Motors Ltd rallied to a 15-month high after Jaguar Land Rover’s sales in July jumped 34% from a year earlier.

The Sensex surged 1.3% at the close, with the bulk of the gains coming after the European markets opened. European stocks rose for a third day and developing-nations equities extended their weekly advance after the Bank of England pared borrowing costs to a record Thursday while unveiling a stimulus package aimed at curbing the fallout from Brexit. Foreign funds have been net buyers of Indian shares for five months through July, the longest stretch of inflows since November 2014.

“The outlook for overseas inflows is improving with more nations opting for monetary stimulus," Gurunath M Mudlapur, managing director at Atherstone Capital Markets Ltd in Mumbai, said by phone.

Global funds bought $94 million of local stocks on 2 August, taking this year’s inflows to $4.8 billion, according to data compiled by Bloomberg. They’ve been net sellers on only two days since 1 July, the data show.

The purchases have helped the Sensex rebounded 22% from a low in February, and pushed up its valuations to 16.3 times 12-months earnings. That’s the most expensive in about 15 months and compares with a multiple of 12.4 for an index of emerging markets.

The high price-to-earnings ratio capped gains in the Sensex after it touched a one-year high last month.

GST boost

Friday’s increase comes after Indian lawmakers Wednesday night approved the creation of a national sales tax a decade after the move was first proposed, handing Prime Minister Narendra Modi the biggest legislative victory since he took office in 2014. The tax can add as much as 2 percentage points to growth, finance minister Arun Jaitley has said.

“The goods and services tax is a game changer, which will boost long-term economic growth and earnings," Mudlapur said.

Hero MotoCorp soared 5.1% to a record. Bajaj Auto rallied 4.3% to an all-time high. Axis Bank gained 3.6%, the most since 2 March. SBI added 3.2% to its highest level since 9 December. ICICI Bank Ltd rose for the first day this week.

Tata Steel added 2.1%, extending the year’s rally to 47%. JSW Steel Ltd rose 1.6% and Steel Authority of India Ltd advanced 2.9%. The government extended the minimum import prices on steel for two months until 4 October, a trade ministry statement said.

Tata Motors jumped 3.3%, extending Thursday’s 4.5% surge. Jaguar Land Rover sold 44,486 vehicles in July, 34% more from the year-ago month. Bloomberg

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Published: 05 Aug 2016, 09:58 AM IST
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