India's Sensex Has Best Run in 18 Months on Stimulus Opti

Most Indian (SENSEX) stocks advanced, with the benchmark index completing its longest stretch of gains in about 18 months, amid expectation the U.S. Federal Reserve will unveil measures to boost economic growth.

The BSE India Sensitive Index, or Sensex, rose 0.1 percent to 18,014.18, according to preliminary closing prices at 3:30 p.m. in Mumbai. Six stocks gained for every two that fell on the 30-member index. The gauge has risen 4.1 percent in seven days through today, the longest winning run since March 31, 2011. The S&P CNX Nifty Index was little changed at 5,430.50. Bajaj Auto Ltd. (BJAUT), the second-largest motorcycle maker, climbed for the third day this week. Bharat Heavy Electricals Ltd. (BHEL), the biggest power- equipment maker, rose the most in a week.

The Federal Open Market Committee ends a two-day meeting today amid speculation it will introduce a third round of asset purchases amid slowing economic growth. Data may show tomorrow that Indian inflation accelerated to 7.05 percent last month from 6.87 percent in July, according to the median estimate of 34 analysts in a Bloomberg survey. The Reserve Bank of India meets for its next policy review on Sept. 17.

“If the Fed does something tonight then the market could push on to 5,600-5,700” on the Nifty, Andrew Holland, chief executive officer of investment advisory at Ambit Capital Pvt. in Mumbai, told Bloomberg TV India today.

India’s benchmark wholesale price index has stayed above 5 percent since December 2009. RBI Governor Duvvuri Subbarao said Aug. 28 policy makers must reduce the inflation rate to “more acceptable levels” of 5 percent or less. Consumer prices rose 9.86 percent in July, faster than the 1.8 percent in China, 5.2 percent in Brazil and 5.6 percent in Russia, data compiled by Bloomberg show.

The Sensex has climbed 17 percent this year, helped by the highest foreign fund inflows among the 10 Asian markets outside China tracked by Bloomberg. Overseas funds bought a net $100 million of shares yesterday, taking investments this year to $12.7 billion, data from the markets regulator show. The Sensex trades at 14.3 times estimated earnings, compared with the MSCI Emerging Markets Index (MXEF)’s 11 times.

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

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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