Nov. 6 (Bloomberg) -- Indian stocks rose, extending the benchmark index’s longest string of gains in five weeks, after the government approved a plan to sell more shares in state- controlled companies, helping it raise funds to boost spending.

MMTC Ltd., India’s biggest state-owned trading company, surged 20 percent, the most in 10 months. Rico Auto Industries Ltd., an auto component maker that supplies General Motors Co. and Ford Motor Co., climbed 5.1 percent after workers ended a 45-day strike.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 94.38, or 0.6 percent, to 16,158.28. The measure this week gained 1.7 percent, snapping two weeks of losses. The S&P CNX Nifty Index on the National Stock Exchange rose 0.6 percent to 4,796.15. The BSE 200 Index added 1.1 percent to 2,011.08.

“The disinvestment move will help moderate India’s fiscal deficit,” said Jagannadham Thunuguntla, head of equities at SMC Capitals Ltd. in New Delhi. “Also, it may help in higher GDP growth led by increased government spending.”

MMTC soared 20 percent to 36,146.85 rupees, the most since Dec. 17. State Trading Corp., the No. 2, leapt 15 percent to 353.6 rupees. NMDC Ltd., India’s largest iron-ore producer, climbed 10 percent to 338 rupees. Hindustan Copper Ltd., India’s biggest copper miner, 99.59 percent state-owned, gained 10 percent to 256.35 rupees. Rashtriya Chemicals & Fertilizers Ltd., 92.5 percent government-owned, added 12 percent to 73.5 rupees.

Budget Deficit

The government owns 99.33 percent in MMTC and 91.02 percent in State Trading, while it holds 98.38 percent in NMDC, according to filings to the Bombay Stock Exchange. The government will use the money raised from the sale of shares of state companies for social spending, Home Minister Palaniappan Chidambaram told reporters in New Delhi yesterday.

India’s fiscal deficit reached 6 percent of gross domestic product in the year ended March 31, surpassing the 2.5 percent government target. The key Sensitive stock index has more than doubled from this year’s lowest level, in March.

Prime Minister Manmohan Singh won a resounding re-election in May, reducing his dependence on allies such as the communist parties that opposed asset sales and increased foreign investment during his first term. A coalition without communist parties allows Singh to sell state assets and accept more overseas funds into insurance and banking.

Rico Auto

Rico Auto gained 5.1 percent to 22.8 rupees. The company will resume deliveries to GM and Ford after workers agreed to end a strike late yesterday, Surendra Singh Chaudhary, senior vice president in charge of human resources, said by phone today. About 2,200 workers stopped work at the company’s factory at Gurgaon near New Delhi, demanding that 16 of their colleagues who were suspended be reinstated.

Overseas funds bought a net 137 million rupees ($2.9 million) of Indian stocks on Nov. 4, the Securities and Exchange Board of India said on its Web site. The funds have bought 681.4 billion rupees of the stocks this year to date, compared with record net sales of 530 billion rupees for the whole of 2008.

The following stocks were among the most active today:

Idea Cellular Ltd. (IDEA IN) lost 5.6 percent to 50.5 rupees. The price estimate of the mobile phone services operator was cut to 43 rupees from 71 rupees at Morgan Stanley. The brokerage kept the rating unchanged at “underweight”.

IFCI Ltd. (IFCI IN) gained 2.5 percent to 51.2 rupees. India short-listed Boston Consulting Group Inc., Ernst & Young LLP and McKinsey & Co. to advise the government on selling a stake in the state-controlled project financier, the Press Trust of India said yesterday, without citing anyone.

Tata Chemicals Ltd. (TTCH IN), the world’s second-largest soda ash producer, gained 5.2 percent to 278 rupees after India imposed a 20 percent duty on soda ash imported from China. GHCL Ltd. (GHCL IN) gained 14 percent to 43.1 rupees, Nirma Ltd. (NIRMA IN), the nation’s No. 2 detergent maker, rose 6.7 percent to 184.6 rupees, and DCW Ltd. (DCW IN) added 4.7 percent to 21.25 rupees.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.

Last Updated: November 6, 2009 06:14 EST