Indian (SENSEX) stocks rose, led by telecom companies and banks, after the finance minister pledged to cut the fiscal deficit and boost growth. Hindustan Unilever Ltd. (HUVR) tumbled after brokerages downgrades the stock.
The BSE India Sensitive Index, or Sensex, added 0.3 percent to 20,048.10, according to preliminary closing prices in Mumbai. Bharti Airtel Ltd. (BHARTI), India’s largest cell-phone operator, led its peers higher after raising call rates. ICICI Bank Ltd., the country’s second-biggest lender, rose 1.8 percent. Hindustan Unilever fell the most in two years after brokerages including Credit Suisse Group AG, CLSA Asia-Pacific Markets and Nomura Holdings Inc. cut their recommendations on the nation’s biggest home-products maker.
Finance Minister Palaniappan Chidambaram told investors in Singapore today the nation’s budget gap won’t breach his target of 5.3 percent of gross domestic product this fiscal year. The Sensex is up 2.9 percent this year, after jumping 26 percent in 2012, as government measures to lift growth prompted foreigners to plow a net $2.67 billion into local shares, a record for the period, according to data compiled by Bloomberg.
“The pace of reforms has been a real positive surprise,” K. Ramanathan, chief investment officer at ING Investment Management, told Bloomberg TV India today. “We are positive on the markets but realize that valuations are no longer cheap. Market movement will be in line with earnings growth.”
The Sensex is valued at 15.9 times estimated earnings, the highest level since February 2012 and the most expensive among the BRIC countries, data compiled by Bloomberg show. Brazil’s Bovespa Index trades at 11.7 times estimated profit, Russia’s Micex Index (INDEXCF) at 5.6 times and China’s Shanghai Composite Index (SHCOMP) at 10 times. The MSCI Emerging Markets Index trades at 11 times, data compiled by Bloomberg show.
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