India Stocks Snap 2-Day Loss on Stimulus Optimism After BOJ Plan

India’s (SENSEX) benchmark stock index ended a two-day decline amid optimism overseas inflows into domestic shares will continue after the Bank of Japan maintained its monetary easing plan.

The S&P BSE Sensex added 0.2 percent to 20,146.31 at 11:57 a.m. in Mumbai. State Bank of India (SBIN), the nation’s largest lender, climbed 1.5 percent, its first gain in three days. Coal India Ltd. (COAL), the world’s largest producer of the fuel, advanced for a third day to head for a more than two-week high.

The BOJ affirmed today a plan to double the monetary base over two years after a jump in bond yields highlighted risks associated with Prime Minister Shinzo Abe’s campaign to revive the economy. Monetary easing by central banks from Europe to the U.S. and Japan has stoked inflows into emerging markets including India, with overseas funds buying a net $13.7 billion of the nation’s shares in 2013, a record for the period, data compiled by Bloomberg show.

“The value of money is very cheap now, and we are seeing enough global liquidity thanks to the U.S. Federal Reserve and Bank of Japan,” Madhav Dhar, managing partner of U.S.- based GTI Capital Group, said on Bloomberg TV India today.

The Standard & Poor’s 500 Index returned to a record yesterday and the MSCI Asia Pacific Index rose to a five-year high today after a Federal Reserve official said bond purchases should continue and Goldman Sachs Group Inc. forecast a rally in U.S. stocks will last at least through 2015.

Fund Inflows

The Sensex climbed last week to its highest level since Jan. 5, 2011, and has rebounded 11 percent since slumping to a seven-month low on April 9, as foreign funds extended equity purchases amid easing by global central banks. Foreigners were net buyers of Indian equities for a 22nd day on May 20, the longest such run since the 35 days through Feb. 15, data from the market regulator show.

State Bank climbed 1.5 percent to 2,397 rupees. ICICI Bank Ltd. (ICICIBC), India’s largest private lender, added 0.8 percent to 1,220.35 rupees. The two stocks contributed the most to the Sensex’s advance. Coal India jumped 2 percent to 313.65 rupees, poised for its highest close since May 6.

Foreign inflows have accelerated since the Reserve Bank of India pared interest rates on May 3. The flows have helped the Sensex climb 3.7 percent this year, the most among benchmark measures in the BRIC group of the largest emerging nations. The Indian gauge trades at 13.9 times projected 12-month profits, near the highest level since October. The MSCI Emerging Markets Index trades at 10.7 times.

Earnings Scorecard

Larsen & Toubro Ltd. (LT), India’s biggest engineering company, added 0.4 percent to 1,611.7 rupees before its results today. It may post fourth-quarter net income of 18.8 billion rupees, according to the median estimate of in a Bloomberg survey.

Profit at just two of the 17 Sensex companies that have reported March-quarter results so far has lagged behind analyst estimates, data compiled by Bloomberg show. Net income at about 43 percent of the 30 index companies missed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.

Volume on the Sensex was 33 percent below the 30-day average for this time of day. The 50-stock CNX Nifty Index (NIFTY) on the National Stock Exchange of India Ltd. added 0.3 percent to 6,129.50.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

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

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