Indian stocks gained the most in Asia, rebounding from a two-year low, amid speculation of an International Monetary Fund plan to ease Italy’s debt problems.
Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, rose to the highest level since Nov. 16. Reliance Industries Ltd. (RIL), the country’s most valuable company, gained for the first time in four days. The European Union is the Asian nation’s biggest trading partner, according the trade ministry.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 3 percent to 16,167.13 as of the 3:30 p.m. close in Mumbai, the steepest advance in three months and the most in Asia. The measure fell to its lowest level in more than two years on Nov. 25, capping four weeks of declines. The gauge’s 14-day relative strength index touched 28.9 on Nov. 23, a level last seen in August. A reading of below 30 is a buy signal for some investors.
“We rallied from heavily oversold territory amid positive news from the euro zone,” Sailav Kaji, chief strategist with Padmakshi Financial Services Ltd. in Mumbai, said by telephone.
The Sensex is headed for its first monthly loss in three amid concern Europe’s debt crisis will derail global economic growth. The IMF is preparing a 600-billion euro ($799 billion) loan for Italy in case the country’s debt crisis worsens, the La Stampa newspaper reported yesterday. The IMF is not in talks with Italy about an IMF loan program, the spokesperson for the Washington-based lender said today in an e-mailed statement.
As of Nov. 17, the IMF had about $390 billion available for lending, which Managing Director Christine Lagarde has said may not be enough to meet demand if the global outlook worsens.
It will be a difficult period for India’s markets until the euro zone stabilizes, Finance Minister Pranab Mukherjee said on Nov. 23. Mukherjee sought parliament’s approval for additional spending in the current fiscal year, according to a Nov. 25 statement in New Delhi.
The Sensex has dropped 21 percent this year amid concern a weak rupee and the central bank’s record increases in borrowing costs will worsen the effects of a global slowdown on earnings. Companies in the measure trade at 14 times future profits, near the lowest level in 2 1/2 years. The MSCI Emerging Markets Index (MXEF) is valued at 9.9 times.
The Reserve Bank of India should wait for “clear signs” that inflation is easing before it starts to lower rates, the Organization for Economic Cooperation and Development said in its economic outlook released today in Paris.
The central bank last month signaled it’s nearing the end of its monetary tightening measures, provided inflation slows, after it raised rates for the 13th time since March 2010. The bank lowered its growth forecast to 7.6 percent from 8 percent.
“India was doing well until last year but has lost momentum rapidly partly due to overseas headwinds,” Amar Ambani, head of research at India Infoline Ltd. (IIFL), said in a Nov. 25 note. The gross domestic product report this week “should clearly tell us as to where things stand as far the economy is concerned,” he said.
The statistics office may say Nov. 30 Asia’s third-largest economy grew 6.8 percent in the September quarter, according to the median economist estimate in a Bloomberg survey. The GDP grew 7.7 percent in the quarter ended June 30 from a year ago, earlier, the slowest pace in six quarters.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. rose 3 percent to 4,851.30. The BSE 200 Index added 2.8 percent.
Reliance rose 4 percent to 783.8 rupees. The company ended talks to buy Bharti Enterprises Ltd.’s stake in its general and life insurance joint ventures with Axa SA. (CS) Tata Motors rose 5.8 percent to 181.9 rupees. State Bank of India (SBIN), the largest lender, rose 5.3 percent to 1,779.6.
Shoppers Stop Ltd. (SHOP) led a decline in Indian retailers after the opposition parties objected to a government decision to allow overseas companies to own as much as 51 percent of local retailers selling more than one brand. Shoppers Stop dropped 7 percent to 368.2 rupees. Pantaloon Retail India Ltd. (PF) fell 4.6 percent to 223.2 rupees.
“Foreign investment in India’s retail sector might get delayed further due to lack of political consensus on implementing foreign direct investment in retail,” Deven Choksey, managing director of K.R. Choksey Shares & Securities, said in a phone interview today.
Kingfisher Airlines Ltd. (KAIR) dropped 1 percent to 26.8 rupees after a government official said the nation’s aviation ministry is scrutinizing the carrier’s finances following the company’s grounding of some aircraft.
Steel Authority of India Ltd. (SAIL) climbed 4 percent to 85.4 rupees. The nation’s second-biggest producer is in talks with two or three possible targets in Australia and New Zealand to buy overseas sources of coking coal, the Financial Chronicle said citing chairman C.S. Verma.
Overseas funds sold a net 7.56 billion rupees of local stocks on Nov. 25, taking their withdrawals from equities this year to 24 billion rupees, data from the regulator show. They withdrew $697 million last week, the biggest weekly outflow in six months, the data show.
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