Indian Stocks Gain Most in a Month as Drugmakers Rally on Profit

Indian (SENSEX) stocks climbed the most in a month as drugmakers rallied on higher earnings and metal companies advanced. The government will release data on consumer prices and factory output later today.

Sun Pharmaceutical Industries Ltd. (SUNP), India’s biggest drugmaker, jumped the most since 2009 after posting a 56 percent gain in net income before a one-time charge. Tata Steel Ltd. (TATA) paced advances for metal shares. State Bank of India led declines for lenders as policy makers announced steps to drain cash from the financial system to boost the rupee.

The S&P BSE Sensex rose 1.3 percent to 19,038.82 at 2 p.m. in Mumbai. Earnings and economic data are setting the tone for the market along with concern about the rupee, said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. (GBNP) The government may announce measures to boost the currency today such as higher import duties, CNBC-TV18 reported, without saying where it got the information.

“A rally in drugmakers is overshadowing the decline in bank stocks,” Mathews said by telephone from the southern city of Kochi. “Investors are also buying beaten-down sectors like metals.”

Sun Pharmaceutical surged 7.2 percent to 542.6 rupees, the most since May 2009. The exporter’s profit jumped after sales of its generic drugs in the U.S. climbed. Cipla jumped 2.3 percent to 418.75 rupees after its first-quarter earnings beat analyst estimates.

Earnings Outlook

Tata Steel, which is scheduled to report earnings tomorrow, soared 8.7 percent to 237.8 rupees amid speculation lower raw material costs will boost profit. The company will benefit from a fall in contract prices of iron ore and coking coal, said Giriraj Daga, an analyst at Nirmal Bang Equities Pvt.

Jindal Steel & Power Ltd. (JSP) advanced 7 percent to 222 rupees. Sterlite Industries (STLT) (India) Ltd. increased 4.7 percent to 79.8 rupees. The S&P BSE Metal Index rallied 3.4 percent, extending last week’s 5.3 percent surge.

About 43 percent of Sensex companies that have reported earnings so far for the June quarter missed analyst estimates. That compares with 27 percent companies that missed forecasts for the March quarter and 43 percent in the three months through December, data compiled by Bloomberg show.

The Sensex has retreated 1.9 percent this year and trades at 13.4 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.

Weak Rupee

The Reserve Bank of India said on Aug. 8 that it will sell cash management bills every Monday, stepping up efforts to bolster the rupee by curbing supply of the currency.

The RBI plans to sell 220 billion rupees ($3.6 billion) of cash management bills each week, according to an e-mailed statement. The measure, which follows a review of the impact of earlier measures to steady the currency, is for “effective liquidity management,” it said.

The Indian currency fell to an all-time low of 61.805 per dollar on Aug. 6. The rupee has slumped about 12 percent against the dollar in the past six months even as the monetary authority restricted banks’ access to cash, curbed trading in currency derivatives and raised two interest rates.

State Bank of India (SBIN) tumbled 2.8 percent to 1,618.3 rupees. The nation’s biggest lender may say profit declined to 34.2 billion rupees in the quarter ended June, compared with 37.5 billion rupees a year ago, according to the median of 42 analyst estimates compiled by Bloomberg. HDFC Bank (HDFCB) fell 0.6 percent to 607 rupees. The S&P BSE Bankex fell 1.1 percent to the lowest level since June 2012.

India will release industrial production data for June at 5:30 p.m. in New Delhi. Factory output probably dropped 1.1 percent, a second straight month of declines, according to the median of 27 estimates in a Bloomberg survey.

Consumer price inflation probably slowed to 9.7 percent in July from 9.87 percent the previous month, according to the median of 17 estimates in a Bloomberg survey.

The CNX Nifty (NIFTY) Index on the National Stock Exchange gained 1.2 percent to 5,633.25. India VIX, which gauges the cost of protection against losses in the Nifty, fell 3.7 percent.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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

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