Bharti Gains on Credit Suisse Upgrade as India Stocks Rise to 3 Week High

India’s stocks advanced, driving the benchmark index to a three-week high, as Bharti Airtel Ltd. and other telecom companies surged after they were upgraded by Credit Suisse Group AG.

Bharti, India’s largest mobile-phone operator, and Idea Cellular Ltd. jumped the most in 13 months after Credit Suisse raised their ratings to “outperform,” citing stable tariffs and reduced prospects of further price wars. Reliance Communications Ltd. added 3 percent. Equities gained for a second day after the International Monetary Fund said India’s growth this year may accelerate at the fastest pace since 2007.

“I have always been bullish on the Bharti stock and have been accumulating it,” said Manish Sonthalia, who manages $230 million in equities at Motilal Oswal Securities Ltd. in Mumbai. “Tariffs are no longer falling and the new players haven’t made a dent. And the IMF projection is a sentiment booster.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 181.81, or 1 percent, to 17,833.54, the highest close since June 21. The gauge gained 2.1 percent this week, the most in three weeks. The S&P CNX Nifty Index on the National Stock Exchange rose 1.1 percent to 5,352.45. The BSE 200 Index increased 0.9 percent to 2,268.77.

Global and Asian emerging-market stock funds took in net inflows as investors bought more shares in Taiwan and India in the week ended July 7 even as they pulled $11.25 billion from equity funds worldwide, EPFR Global said. Indian inflows rose to an 11-week high, EPFR said in an e-mailed statement.

May 2009

Bharti jumped 9.9 percent to 308.65 rupees. Idea surged 13 percent to 66.7 rupees. Both stocks gained the most since May 18, 2009, when the Sensex surged 17 percent on optimism triggered by the Congress party’s biggest election victory in two decades. Reliance Communications increased 3 percent to 193.4 rupees. Bharti’s shares have the potential to reach 350 rupees in a year, Motilal’s Sonthalia said.

Prior to today’s rally, Bharti shares had declined 29 percent over 12 months and Reliance Communications lost 26 percent, the Sensex’s worst performers, on concern that the price war among mobile phone companies will slash earnings. Idea dropped 15 percent, while the Sensex climbed 28 percent.

India’s telecom stocks were upgraded at Credit Suisse by analysts led by Bhuvnesh Singh, saying tariffs have been stable over the past eight months and the cost of acquiring high-speed third-generation bandwidth will crimp the ability of “challengers to go for another price war.” Reliance Communications had its rating increased to “neutral.”

Nothing Pessimistic

“There is nothing to be so pessimistic about them, they are likely to benefit as the economy grows,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai. “The general buoyant mood after yesterday’s IMF forecast is continuing today.”

Infosys Technologies Ltd., the second-largest software services provider, which gets almost 99 percent of its revenue from abroad, climbed 1.6 percent to 2,873.8 rupees, a record, as investors became more confident in the global economic recovery. Wipro Ltd., the third-biggest software services provider, increased 1.5 percent to 401.2 rupees.

Sterlite Industries (India) Ltd., the biggest copper and zinc producer, rose 1.6 percent to 167.7 rupees. Three-month delivery copper gained as much as 1.1 percent on the London Metal Exchange.

Tata Steel, Hindalco

Tata Steel Ltd., the biggest producer of the alloy, advanced 2.3 percent to 495.95 rupees. Hindalco Industries Ltd., the biggest aluminum producer, added 2.9 percent to 149 rupees.

DLF Ltd., India’s biggest developer, gained 4.6 percent to 295.8 rupees, while Jaiprakash Associates Ltd., a builder of dams, roads and bridges climbed 1.5 percent to 125.3 rupees.

Overseas funds bought a net 352 million rupees ($7.5 million) of Indian equities on July 7, bringing total investments in stocks this year to 315.8 billion rupees, 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 ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.

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

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