Indian (SENSEX) stocks rose for a third day, with the benchmark index holding at a two-year high. Software exporters climbed as an expansion in U.S. manufacturing boosted investor confidence in the world’s largest economy.
The BSE India Sensitive Index, or Sensex, rose 0.3 percent to 19,764.78 at the close in Mumbai. The 30-stock gauge ended at its highest level since Jan. 6, 2011 yesterday. A measure of software makers on the MSCI India Index jumped to a one-month high after manufacturing in the U.S. grew more-than-expected in December. Dr. Reddy’s Laboratories Ltd. (DRRD), which earns about 40 percent of its revenue from North America, jumped 2.4 percent.
The Institute for Supply Management’s U.S. factory index rose to 50.7 in December from 49.5 a month earlier, the group said yesterday. Economists in a Bloomberg survey projected a reading of 50.5, according to the median of 71 forecasts. The U.S. took in 11 percent of India’s exports in the six months to September 2011, data from India’s trade ministry show.
“A recovery in the U.S. is boosting sentiment for software exporters but investors would watch the upcoming quarterly results and management commentary before taking further calls,” Sadanand Shetty, a senior fund manager at Taurus Asset Management Co. in Mumbai, said by phone. “Foreign investors continue to be very bullish on India as can be seen from the momentum in flows.”
Foreign funds bought a net $24.5 billion of local stocks in 2012, the highest among 10 Asian markets tracked by Bloomberg. Offshore funds were net buyers of equities on all but one day last month. They bought $149 million of shares on Jan. 1, data from the market regulator show.
The Sensex climbed 26 percent last year, fueled by fund flows and government measures to open the economy and boost economic growth. The rally has driven the Sensex’s valuation to 15.6 times estimated earnings, the highest level since March, data compiled by Bloomberg show. The MSCI Emerging Markets Index trades at a multiple of 12.4. Volumes on the Sensex were 14 percent lower than the 30-day average today.
Indian stocks rose yesterday after U.S. lawmakers approved a bill undoing tax increases and spending cuts threatening the recovery in the world’s biggest economy.
“The fact that the fiscal cliff has been avoided for the time being is a big relief,” Ratnesh Kumar, managing director at Standard Chartered Securities India, told Bloomberg TV India today. “Developed markets will still be on a slow-growth path through 2013 as well as beyond. Within that context, what is important for emerging markets including India is to pick up the growth momentum.”
Prime Minister Manmohan Singh overhauled policies starting mid-September, raising diesel prices and allowing more foreign investment in the retail and airlines to lift growth from September quarter’s 5.3 percent, which matched a three-year low.
The MSCI India Information Technology Index jumped 1.2 percent to 659.44, its highest close since Dec. 5. Tata Consultancy Services (TCS), India’s top software exporter, jumped 1.2 percent to 1,278.30 rupees. Infosys Ltd. (INFO), the second largest, rose 1.2 percent to 2,337.90 rupees. The two companies got more than half of their revenue from North America in the year ended March, data compiled by Bloomberg show.
Dr. Reddy’s rallied 2.4 percent to 1,881 rupees, its highest close since Dec. 11. Energy stocks also advanced with Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, adding 1.5 percent to 860.75 rupees and state-owned explorer Oil & Natural Gas Corp. (ONGC) gaining 1.9 percent to 279.80 rupees. Bharti Airtel Ltd. (BHARTI), the largest Indian mobile-phone operator, climbed 2.2 percent to 328 rupees.
The S&P CNX Nifty Index (NIFTY) on the National Stock Exchange of India added 0.3 percent to 6,009.5. Its January futures traded at 6,037.55. The BSE Mid-Cap Index climbed 0.8 percent. India VIX, which measures the cost of protection against losses in the Nifty, slid 1.8 percent to 13.47.
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