Indian (SENSEX) stocks climbed, putting the benchmark index on course for the biggest monthly gain since November. Automakers rose after their earnings beat estimates and ahead of a government that may show economic expansion.
The S&P BSE Sensex added 0.3 percent to 20,215.40 at the close in Mumbai, reversing an intraday loss of 0.4 percent, with most of the gains coming in the last half-hour of trade. The gauge is headed for a 3.7 percent advance this month, the most since the 4.5 percent climb in November. Tata Motors Ltd. (TTMT) and Mahindra & Mahindra Ltd. (MM) rallied more than 4 percent each after reporting fourth-quarter profit that beat estimates. ITC Ltd. (ITC) jumped 3.4 percent, the biggest boost to the Sensex.
Net income at just eight of the 30 companies in the Sensex have missed forecasts for the March quarter, compared with 43 percent in the three months ended Dec. 31, according to data compiled by Bloomberg. The Sensex has risen 4.1 percent this year, reaching the highest level in more than two years on May 17, as monetary easing by global central banks increased flows to emerging markets.
“We have seen the worst of the earning cycle downgrade,” Adrian Mowat, chief Asian and emerging-market strategist at JPMorgan Chase & Co., told Bloomberg TV India today. “It’s pretty typical for markets to turn three-to-six months before earnings downgrades turn.”
Mahindra & Mahindra jumped 4.5 percent to 1,004.65 rupees, a record. India’s largest maker of sport-utility vehicles and tractors said net income, excluding units, increased to 8.89 billion rupees ($158 million) in the three months ended March from 8.74 billion rupees. That surpassed the 7.6 billion-rupee median of 39 analysts’ estimates compiled by Bloomberg.
Tata Motors Ltd., India’s biggest automaker, surged 4.4 percent to 317.05 rupees, its steepest climb since Nov. 29. Fourth-quarter profit fell 37 percent to 39.5 billion rupees, beating the 26.7 billion-rupee median of 41 estimates. Earnings were announced yesterday after trading ended.
A government report tomorrow may show the nation’s gross domestic product rose 4.8 percent in the three months through March, according to the median estimate of 33 economists polled by Bloomberg. GDP expanded 4.5 percent in the previous quarter, the slowest pace since 2009.
The Reserve Bank of India May 3 cut the repurchase rate for a third time this year, extending the only reduction in borrowing costs this year in the BRIC group of the largest emerging economies. Governor Duvvuri Subbarao said May 14 the latest data showing inflation eased to a 41-month low in April will be factored into the next review scheduled for June 17.
“We had a period of time where Indian growth was poor and inflation was high, and now that poor growth is translating into less inflation the central bank has a lot of flexibility to cut rates,” JPMorgan’s Mowat said. “We’re entering a sweet spot.”
ITC, India’s largest cigarette company which has the highest weighting on the Sensex, surged 3.4 percent to 354.3 rupees. Housing Development Finance Corp. (HDFC), the nation’s biggest mortgage lender, increased 1.7 percent to 926.25 rupees.
Overseas investors bought $173 million of local stocks on May 29, taking this year’s inflows to $14.9 billion, a record for the period and the most after Japan among 10 Asian markets tracked by Bloomberg.
The Sensex is valued at 13.9 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.3 times. Volume on the measure was 2.7 percent lower than the 30-day average. The 50-stock CNX Nifty Index (NIFTY) on the National Stock Exchange of India Ltd. added 0.3 percent to 6,124.05. Its May futures settled at 6,124.05. India VIX, which gauges the cost of protection against losses in the Nifty, sank 10 percent.
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