Tata Motors Leads Sensex Index Advance on India's Profit-Growth Prospects

India’s benchmark stock index advanced for a second day, completing a third monthly gain, on speculation growth in company earnings will attract investors.

Tata Motors Ltd., the owner of Jaguar Land Rover, climbed to the highest in more than three years. Thomas Cook India Ltd., the local unit of Europe’s second-biggest tour operator, rose after profit more than quadrupled. The Greek crisis may favor capital inflows into India in the medium to long term, deputy chairman of the country’s Planning Commission Montek Singh Ahluwalia said yesterday.

“The earnings tailwind is stronger than the global headwinds at the moment,” said Nitin Rakesh, chief executive officer of Motilal Oswal Asset Management Co. in Mumbai. “There is more upside potential in the stock markets than downside risk. We are in an earnings expansion cycle fueled by domestic consumption.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 55.24, or 0.3 percent, to 17,558.71, paring this week’s loss to 0.8 percent and completing its longest monthly winning streak since May. The S&P CNX Nifty Index on the National Stock Exchange rose 0.5 percent to 5,278. The BSE 200 Index increased 0.6 percent to 2,230.17.

Earnings Growth

Tata Motors, the maker of the world’s cheapest car, the Nano, jumped 3.6 percent to 872.6 rupees. Hero Honda Motors Ltd., India’s largest motorcycle maker, soared 4.5 percent to 1,915.4 rupees, reversing five days of decline.

Thomas Cook India climbed 1.3 percent to 69.05 rupees after first-quarter net income jumped to 78.6 million rupees ($1.78 million). Lender ING Vysya Bank Ltd. soared 4.4 percent to a six-month high of 318.5 rupees after its quarterly profit surged 38 percent.

Infosys Technologies Ltd., the second-largest software services provider, advanced 1.1 percent to 2,738.15 rupees, while larger rival Tata Consultancy Services Ltd. gained 0.7 percent to 765.4 rupees.

Motilal’s Rakesh expects earnings of Indian companies to grow 20 to 25 percent annually over the next four years. He advises investors to buy shares of financial services, capital goods, infrastructure, automakers and consumer companies, while declining to name any.

State Bank of India, the biggest lender, gained 1.2 percent to 2,300.7 rupees. Reliance Infrastructure Ltd., the builder of a mass rapid transit system in Mumbai, advanced 1.1 percent to 1,137.4 rupees.

Foreign Funds

Stocks also gained after India’s lower house of Parliament yesterday approved Finance Minister Pranab Mukherjee’s plan to reduce the biggest budget deficit in 19 years. Ratification of the plan, unveiled on Feb. 26, came two days after Prime Minister Manmohan Singh’s government defeated opposition motions seeking to roll back tax increases.

Foreign funds have been net buyers of stocks on all but two days since Mukherjee’s budget speech.

On April 19, the funds sold stocks after U.S. regulators filed a suit against Goldman Sachs Group Inc., spurring concern among investors the global financial crisis isn’t over. Overseas investors sold a net 313 million rupees ($7 million) of Indian stocks April 28 as European credit-rating cuts promoted investors to sell riskier assets.

So far this year foreign investors have purchased 292.2 billion rupees of equities, according to the nation’s market regulator.

Inflows from overseas reached a record 834.2 billion rupees 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 529.9 billion rupees of shares in 2008, triggering a record annual decline.

The following were among the most active on the exchange:

Ashok Leyland Ltd. (AL IN) soared 9.3 percent to 60.05 rupees, the highest since at least January 1991. India’s second- biggest truckmaker plans to spend 12 billion rupees in capital expenditure and another 8 billion rupees on ventures in the next two years, according to its e-mailed statement yesterday.

Separately, Prayesh Jain, an analyst at India Infoline Ltd., upgraded the stock to “buy” from “market performer,” citing growth in volumes in a note to investors today.

Hindustan National Glass & Industries Ltd. (HNGI IN) climbed 1.3 percent to 229.55 rupees. The maker of glass bottles and vials said its entered a venture with Belgium’s OMCO International NV to set up a factory for designing, marketing and sale of moulds for glass packaging products.

Kirloskar Brothers Ltd. (KKB IN) rose 3 percent to 292.45 rupees. The machine tools and agricultural implements company bought a 90 percent stake in South Africa-based Braybar for 110 million rupees, according to its statement to the Bombay Stock Exchange.

United Phosphorus Ltd. (UNTP IN) surged 15 percent to 170.2 rupees, its steepest climb in 19 months. The maker of Doom and Phoskill pesticide told analysts that it may buy a company by year-end.

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

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