India’s (SENSEX) benchmark equity index had its biggest gain since November as some investors judged recent losses as excessive and as Asian stocks climbed on bets central banks globally will continue stimulus measures to boost growth.
The S&P BSE Sensex index rose 1.4 percent to 19,143.17 at the close, the most since Nov. 29. Tata Motors Ltd. (TTMT) rallied 3.7 percent, pacing advances among automakers. Sterlite Industries (India) Ltd. (STLT) rebounded from a three-day drop as copper prices gained in London. Reliance Industries Ltd. (RIL) jumped 1.7 percent after Morgan Stanley added the stock to its India-focus list. ICICI Bank Ltd. (ICICIBC) jumped 3.3 percent.
The Sensex slumped 5.2 percent in February, the most since May, as corporate earnings slowed and government data showed last week Asia’s third-biggest economy grew at the weakest pace in almost four years. The gauge trades at 13.5 times projected 12-month profits, compared with 14.3 times on Jan. 25 when it climbed to a two-year high, data compiled by Bloomberg show.
“The correction has exceeded our expectations,” Ridham Desai, managing director and head of India research at Morgan Stanley, told Bloomberg TV India today. “Nothing has changed fundamentally. I am more bullish now than I was in January.”
Morgan Stanley’s year-end Sensex target is unchanged at 23,069, Desai said.
The MSCI Asia Pacific Index (MXAP) increased 0.5 percent as U.S. Federal Reserve Vice Chairman Janet Yellen said yesterday the central bank should press on with $85 billion in monthly bond buying. Kikuo Iwata, a nominee for Bank of Japan deputy governor, said in a confirmation hearing today that the central bank should buy longer-term bonds to help achieve a 2 percent inflation target.
Sterlite, India’s biggest copper producer, increased 4.8 percent to 94.75 rupees, the top performer on the Sensex today. Copper climbed the most in a week in London after China held a target for economic growth at last year’s level, supporting the demand outlook in the biggest consumer of the metal. Aluminum producer Hindalco Industries Ltd. (HNDL) rallied 4.5 percent to 98.60 rupees, the steepest gain since Oct. 31.
Reliance, owner of the world’s largest refining complex, added 1.7 percent to 826.35 rupees. ICICI Bank, the country’s largest private lender, jumped 3.3 percent to 1,093.60 rupees, the most since Nov. 29.
India’s government will announce more policy measures to boost economic growth, Finance Minister Palaniappan Chidambaram told a gathering of industrialists yesterday. Chidambaram said he plans to address investors in Japan, Canada and the U.S. in April and May.
Overseas funds bought a net $168 million of Indian stocks on March 1 as money returned to local shares after the biggest net sale in about a year on Feb. 28, data compiled by Bloomberg show. Foreigners have bought a net $8.4 billion worth of shares this year, a record for the period, the data show.
The Sensex declined for five straight weeks through March 1. Earnings at 43 percent of the index companies missed estimates in the three months through Dec. 31, compared with 40 percent in the previous two quarters, as demand falters, data compiled by Bloomberg show. The nation’s economy expanded 4.5 percent from a year ago in the final three months of 2012, the weakest pace in almost four years, data showed last week.
The slowdown may prompt the Reserve Bank of India to cut funding costs at its March 19 review, Abhay Laijawala, head of research at Deutsche Equities India Pvt., said yesterday in Mumbai. The RBI pared the repurchase rate by 25 basis points to 7.75 percent on Jan. 29, the first reduction in nine months.
Tata Motors, the nation’s biggest truckmaker, rallied 3.7 percent to 300.5 rupees, the most since Jan. 9. Maruti Suzuki India Ltd. (MSIL), the largest carmaker, added 2.3 percent to 1,430.75 rupees. Indian automakers benefit from lower borrowing costs as 80 percent of vehicle purchases are funded with loans.
“Growth will take precedence over inflation for the RBI,” Laijawala said. Deutsche Bank group expects a further 75-basis point reduction in interest rates in 2013. It has a year-end Sensex target of 22,500.
Volumes on the Sensex were 7.9 percent more than the 30-day average. The 50-stock CNX Nifty Index (NIFTY) of the National Stock Exchange of India Ltd. jumped 1.5 percent to 5,784.25 while its March futures settled at 5,802.80. India VIX, which measures the cost of protection against losses in the Nifty, retreated 2.1 percent to 13.39.
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