Most Indian Stocks Climb Before RBI Policy; Bharat Heavy Falls

Most Indian stocks advanced before a central bank report on Asia’s third-largest economy today and an interest-rate decision tomorrow.

The BSE India Sensitive Index (SENSEX), or Sensex, rose less than 0.1 percent to 18,638.17, accordingly to preliminary closing prices in Mumbai. Sixteen shares climbed and 14 dropped on the 30-stock gauge, which changed directions at least 12 times. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, climbed the most in a week. Bharat Heavy Electricals Ltd. (BHEL), the biggest power-equipment maker, fell the most in nine months after reporting net income that trailed estimates.

India’s central bank will leave interest rates unchanged at 8 percent, 16 of 28 economists said in a Bloomberg News survey. Eleven expect a second cut this year, to 7.75 percent, and one 7.5 percent. Finance Minister Palaniappan Chidambaram has called for lower borrowing costs to back an economic-policy revamp that includes fuel-subsidy curbs to narrow a budget gap, steps to spur investment and efforts to bolster the rupee.

“The eventual direction of interest rates is down, so whether they do it in this meeting or they do it in the next meeting is not very important,” Ridham Desai, India managing director at Morgan Stanley, said in an interview to Bloomberg TV India today. “What’s more important is that the liquidity in the market doesn’t get squeezed.”

The Reserve Bank of India may cut banks’ reserve ratio by 25 basis points to 4.25 percent, according to 18 of 28 analysts in another Bloomberg survey. Two expect a reduction of 50 basis points and the rest no change.

The Sensex has increased 21 percent this year, driven by overseas fund purchases and government policy reforms announced since mid-September to revive the economy. Foreign funds bought a net $18.2 billion of local shares this year, the most among 10 Asian markets tracked by Bloomberg, excluding China. They were net buyers for a fifth day on Oct. 23, purchasing a net $79.6 million of shares, data from the regulator show.

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