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Sensex Index Extends 2 1/2-Year High on Eve of India's Festive Spending
India’s benchmark stock index rose for a fourth day, extending a 2 1/2-year high, on the eve of a festive season that may see a surge in consumer spending.
Hindustan Unilever Ltd., a unit of the world’s second- largest consumer-goods maker, climbed to the highest in nine months. Mahindra & Mahindra Ltd., the nation’s biggest sport- utility vehicle and tractor maker, advanced 3.2 percent. India’s festive celebrations begin tomorrow with a religious holiday, when financial markets are closed. Easing concern over Europe’s budget deficit crisis also boosted investor confidence.
“Right now India seems to be in a sweet spot,” said Krishnakumar Srinivasan, fund manager at Sundaram BNP Paribas Asset Management Co. in Chennai who manages $537 million in stocks. “Consumer spending has improved, and we’ll see good growth this festive season and that will boost markets.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 132.95, or 0.7 percent, to 18,799.66. The gauge advanced 3.2 percent this week, its steepest weekly increase since the first week of March, to its highest level since January 2008. The S&P CNX Nifty Index on the National Stock Exchange rose 0.6 percent to 5,640.05. The BSE 200 Index advanced 0.6 percent to 2,409.09.
Hindustan Unilever
Hindustan Unilever advanced 1.8 percent to 279.05 rupees, its highest close since Nov. 30. The company raised detergent prices by 8 percent to cover higher costs, the Daily News & Analysis reported, citing analysts it didn’t identify.
“In a business as large as ours it is impossible to comment on individual price changes,” Ram Rammohan, a spokesman for the company said by phone.
Mahindra increased 3.2 percent to 655.6 rupees, its steepest advance since June 16. State Bank of India, the nation’s largest, climbed 3 percent to 2,984.05 rupees, the highest in at least 19 years. The world’s third-fastest growing major economy begins its festive season tomorrow with a holiday for the Islamic Eid-ul-Fitr that marks the end of the fasting month of Ramadan, and celebrations through to November that include paying homage to Ganesh, the Hindu elephant god of prosperity.
“What we are seeing is a significant and almost dramatic improvement in consumer sentiment,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “This probably would be the best year as far as a strong revival in consumption is concerned” since the collapse of Lehman Brothers Holdings Inc. in 2008.
‘Better Returns’
Easing concern over Europe’s sovereign debt crisis boosted demand for riskier assets worldwide, with the MSCI Asia Pacific Index climbing 0.9 percent.
“We see investors putting money into instruments that will get better returns and where growth is solid, such as in emerging markets,” said Sundaram BNP’s Srinivasan.
Overseas funds bought a net 2.01 billion rupees ($43.1 million) of Indian equities Sept. 7, raising total investments in the stocks this year to 623.2 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: Hemal Savai in Mumbai at at hsavai@bloomberg.net.
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