Indian Stocks Rise Most in a Week on Growth Boost Expecta

Indian equities rebounded from a six-week low on speculation policy makers will take steps to stimulate economic growth.

The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.4 percent to 18,498.60, the most since Oct. 22, according to preliminary closing prices in Mumbai. The gauge lost 1.1 percent yesterday after the central bank refrained from paring interest rates to fight price pressures. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, climbed the most in a month. Housing Development Finance Corp. (HDFC), the top mortgage lender, gained for the first time in four days.

While the Reserve Bank of India resisted Finance Minister Palaniappan Chidambaram’s call for lowering funding costs to back a recent government policy overhaul, the authority said there’s a “reasonable likelihood” of monetary easing in the first quarter of 2013 as inflation cools. The RBI cut lenders’ reserve ratio, injecting 175 billion rupees ($3.2 billion) into the system to revive growth from the weakest level since 2009.

The central bank held the benchmark repurchase rate at 8 percent. The measure has been reduced only once -- a 50 basis point decrease in April -- after it was bolstered by a record 375 basis points through 2010 and 2011 to combat inflation that has averaged 8.6 percent in the past three years.

Consumer prices may accelerate to 8 percent in the quarter ending December and ease to 7.5 percent in the three months to March 2013, the central bank forecast yesterday. The RBI pared its growth estimate for this fiscal year to 5.8 percent from 6.5 percent on slowing investment and consumer spending.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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

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