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Tata Motors, Property Developers Gain As Sensex Climbs to 30-Month High

India’s benchmark stock index advanced to a 30-month high, led by real estate developers and automakers, amid expectations that rising incomes and the nation’s economic growth will boost profitability.

Indiabulls Real Estate Ltd. climbed to its best level in five months after beating six other bids to buy land in central Mumbai. Carmaker Tata Motors Ltd. increased to its highest in more than three year before its quarterly earnings report tomorrow. India’s domestic car sales in July were the highest on record, Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers, said today.

“Sentiment is good and things are looking up,” said D.K. Aggarwal, who manages about $100 million as chairman of SMC Wealth Management Services Ltd. in New Delhi. “With a little support from the world market, the Sensex may reach 21,000 by March. We expect good numbers from Tata Motors given that demand for the auto industry has been strong.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 143.51, or 0.8 percent, to 18,287.50, its highest close since Feb. 5, 2008. The S&P CNX Nifty Index on the National Stock Exchange rose 0.9 percent to 5,486.15. The BSE 200 Index increased 0.9 percent to 2,331.80.

Land Prices

Indiabulls increased 3.5 percent to 175.7 rupees, its best close since March 11. Indiabulls Infraestate Ltd., a unit of developer Indiabulls Real Estate, beat out Tata group and Oberoi Constructions Pvt. among others to pay 15.05 billion rupees ($326 million) for an 8.37 acre (3.4 hectares) plot of land in central Mumbai. The company last week bought an adjacent lot, trumping seven other offers.

DLF Ltd., the biggest developer, soared 4.2 percent to 320.65 rupees, its biggest climb in almost a month. Unitech Ltd., the second-biggest developer, surged 6.5 percent to 90.5 rupees, its best close since December 8. Home prices in Mumbai jumped about 30 percent in the six months to April, according to estimates by real-estate broker Knight Frank (India) Pvt.

Tata Motors rose 2.9 percent to 919.4 rupees, its highest close since January 2007. The stock has gained 9.2 percent since Aug. 3 and is the best performer on the 30-member Sensex in the past year. The earnings report is due during trading hours tomorrow.

India’s car sales in July climbed 38 percent to 158,764 compared with a year earlier, according to data released by the Society of Indian Automobile Manufacturers in New Delhi today.

Hero Honda Motors Ltd., the biggest motorcycle maker, rose 1.8 percent to 1,865.55 rupees.

Earnings Growth

Indian stocks may climb by about 15 percent to a record 21,000 by March as corporate earnings growth and the nation’s economic expansion lure investors, according to Kotak Mahindra Old Mutual Life Insurance Ltd. The Sensex last reached a record of 20,873.33 on Jan. 8, 2008.

“Growth is more or less confirmed,” Sudhakar Shanbhag, who manages $1.6 billion in assets as chief investment officer at Kotak, said in an interview in Mumbai today.

Shanbhag expects corporate earnings growth of at least 20 percent this financial year through March, and the same pace in the following 12 months, with the main beneficiaries likely to be automakers, drugmakers, technology, large machinery makers, engineering and media companies. That would be the highest rate in two years.

India’s $1.2 trillion economy may expand 9.4 percent in the year through March, the fastest pace since 2007, the International Monetary Fund said on July 8.

Foreign Funds

Foreign investors purchased a net $5.8 billion of Indian stocks in June and July, making up half of the $11.7 billion going to the region’s developing markets excluding China and Malaysia, Credit Suisse Group AG analysts led by Sakthi Siva said Aug. 3.

Overseas funds bought a net 1.67 billion rupees of Indian equities on August 5, the 23rd straight day that purchases have exceeded sales, raising their total investments in the stocks this year to 511.9 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.

The following stocks were among the most active on the exchange:

Amara Raja Batteries Ltd. (AMRJ IN) gained 1.5 percent to 191.7 rupees. The manufacturer of car and truck batteries plans to expand its south India-based health drinks and frozen foods business to other states, the Press Trust of India reported quoting people it didn’t identify. Managing Director Jayadev Galla couldn’t immediately be reached at his office telephone for comment on the report.

Bannari Amman Spinning Mills Ltd. (BASM IN) jumped 12 percent to 136.4 rupees. The textile company said first-quarter profit surged five times to 102.4 million rupees.

B.L. Kashyap and Sons Ltd. (KASH IN) soared 16 percent to 386.75 rupees, the most in a year. The construction company will split each share into five and give investors one free share for each one they hold, it said today when reporting first-quarter profit climbed 30 percent from a year earlier.

Britannia Industries Ltd. (BRIT IN) sank 5.8 percent to 2,150.5 rupees after saying first-quarter profit declined 31 percent to 328.3 million rupees.

IndusInd Bank Ltd. (IIB IN) increased 3.9 percent to 214.2 rupees, its steepest gain in a month. The lender was rated “overweight” in a new coverage by Seshadri K Sen, an analyst at JPMorgan Securities Inc., with a 15-month share price estimate of 250 rupees.

Power Grid Corp. of India (PWGR IN) advanced 2.6 percent to 102.15 rupees, for its biggest gain since April 7. The nation’s biggest electricity transmission company’s first-quarter net income climbed 29 percent from a year earlier.

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

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