Indian Stocks Climb as Metals Rally Overshadows Inflation Data

Indian (SENSEX) stocks advanced for a fourth day, led by metal producers, as Tata Steel Ltd.’s (TATA) profit surge overshadowed worse-than-estimated inflation data.

Tata Steel, India’s biggest producer, climbed 3.6 percent after the company reported its biggest quarterly profit in two years. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, jumped 9.7 percent, the largest increase since March 2010. Financial Technologies (India) Ltd. tumbled 13 percent to a nine-year low.

The Sensex rose 0.7 percent to 19,367.59 at the close in Mumbai. Wholesale prices grew 5.79 percent in July from a year earlier, data showed, compared with the 5 percent median estimate of analysts in a Bloomberg survey. The Reserve Bank of India raised two interest rates last month and the government this week stepped up efforts to curb the record current-account deficit as a weak rupee boosts import costs.

“Higher inflation will end whatever little flexibility the RBI had on monetary policy,” Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance, said in a phone interview.

The government increased import duties on gold, platinum and silver yesterday, part of measures to trim a record current-account deficit and support the rupee after it weakened to a record low this month. The central bank tightened lenders’ access to cash in July, and held the benchmark repurchase rate at its last two policy meetings, citing inflation risks.

Metal Producers

Tata Steel advanced 3.6 percent to 250.10 rupees, the highest close since July 16. The company reported group net income climbed to 11.4 billion rupees ($186 million) in the three months ended June, from 5.98 billion rupees a year earlier. That compared with the 3.05 billion-rupee median estimate of 19 analysts in a Bloomberg survey.

Aluminum maker Hindalco Industries Ltd. (HNDL) advanced 7.4 percent to 98.20 rupees, the biggest rise since Sept. 14. Sterlite Industries India Ltd. (STLT), the nation’s largest copper producer, rose for a fifth day, gaining 2.3 percent to 81.25 rupees. Shares of the three metals makers slumped at least 34 percent this year through Aug. 6.

Tata Motors jumped 9.7 percent to 319.10 rupees, capping its biggest two-day rally since October 2011, after Jaguar Land Rover sales climbed 21 percent in July.

Housing Development Finance Corp. (HDFC) declined 1.4 percent to 780.70 rupees.

Financial Technologies

Financial Technologies, which controls Multi Commodity Exchange of India Ltd., the nation’s biggest commodity futures exchange, tumbled 13 percent to 146.95 rupees, the lowest close since December 2004. Its unit National Spot Exchange Ltd. is planning a pay-out of dues to buyers, sellers and brokers arising from the cancellation of contracts, which prompted a two-day, 73 percent slump in Financial Exchange’s shares earlier this month.

“There is uncertainty about the settlement plan, which is prompting investors to sell shares,” Kishor Ostwal, managing director at CNI Research Ltd. (CNIR), said today. Multi Commodity Exchange shares dropped 5 percent to a record low.

The Sensex has lost 0.3 percent this year and trades at 13.7 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.2 times.

About 47 percent of Sensex companies missed analyst earnings estimates in the June quarter. That compares with 27 percent for the three months ended March, and 43 percent in the quarter through December, data compiled by Bloomberg show.

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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