Indian Stocks Rally Most in 2 Weeks on Fed; Banks, Metals Climb

Indian (SENSEX) stocks advanced the most in two weeks after U.S. Federal Reserve Chairman Ben S. Bernanke said the world’s biggest economy will continue to need stimulus.

The S&P BSE Sensex increased 2 percent to 19,676.06 at the close in Mumbai, the most since June 28. All but three stocks on the measure rose. State Bank of India rallied the most in more than a week, pacing gains among lenders. Aluminum producer Hindalco Industries Ltd. (HNDL) climbed 4.7 percent, leading metal companies higher. Software exporter Infosys Ltd. (INFO) gained for the fourth day before its earnings report tomorrow.

Bernanke backed sustained stimulus in a speech yesterday, boosting the prospect of the flow of funds to emerging markets. Global investors sold a net $1 billion of Indian equities and pulled $8.1 billion from local debt since May 22, when the Fed signaled it may cut asset purchases this year. The withdrawals fueled the rupee’s slide to a record and helped the Sensex in June to its biggest monthly loss since February.

“The hope that the stimulus will not be withdrawn in a hurry has propped up global markets and we have rejoiced too,” Mehraboon Jamshed Irani, principal and head of private client group at Nirmal Bang Securities Ltd., said by telephone from Mumbai. “The market will continue to be driven by some more liquidity, which until a month ago was going out.”

Foreign funds have bought a net $174 million of domestic shares this month through July 10, after pulling $1.8 billion in June, which was the most since August 2011, data compiled by Bloomberg show. This year’s net inflows of $13.5 billion into local shares is the highest in Asia after Japan, the data show.

Lenders Climb

State Bank advanced 1.9 percent to 1,911.35 rupees, the steepest climb since July 1. HDFC Bank Ltd., (HDFCB) India’s biggest lender by value, jumped 3.6 percent to 683.25 rupees, the highest close in a month. ICICI Bank Ltd. (ICICIBC), the second-biggest, added 1.9 percent to 1,057.95 rupees. The S&P BSE Bankex index of 13 lenders jumped the most in two weeks.

Hindalco Industries Ltd. increased 4.7 percent to 102.8 rupees. Sterlite Industries (India) Ltd. (STLT), the nation’s largest copper and zinc maker, increased 4.7 percent to 87.65 rupees. The two stocks were the top performers on the Sensex. Tata Steel Ltd. (TATA), India’s biggest producer of the alloy, rebounded from a four-year low, adding 1.9 percent to 261.05 rupees.

Infosys added 1.1 percent to 2,528.35 rupees, rising each day this week. The company is expected to forecast sales in dollar terms will rise as much as 7.5 percent in the year to March, from its earlier projection for as much as 10 percent growth, according to the median of 10 analysts in a Bloomberg survey. Infosys will be the first Sensex member to report.

Earnings Outlook

Sensex companies’ profits may increase 5.8 percent in the three months ended June after two quarters of “near-zero” growth, Bank of America Corp. said in a July 3 report. Still, there could be a “risk of disappointment in earnings” because of a weak rupee, the report said.

The rupee was little changed after climbing as much as 0.5 percent. The currency depreciated to a record 61.2125 on July 8, making imports costlier and threatening to spur gains in consumer prices, which have stayed close to 10 percent for more than a year. Prices climbed 9.3 percent in June, a Bloomberg survey of economists showed before data due tomorrow.

Reliance Industries Ltd. (RIL), the owner of the world’s largest refining complex, climbed 1.6 percent to 870.05 rupees. ITC Ltd. (ITC), India’s biggest cigarette company, gained 2.3 percent to 353.4 rupees. Larsen & Toubro Ltd. (LT), the largest engineering company, surged 2.4 percent to 964.85 rupees.

The CNX Nifty Index on the National Stock Exchange of India jumped 2 percent to 5,935.10, its highest since June 3.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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