Indian (SENSEX) stocks advanced as the current-account gap widened by less than economists forecast, countering concern that a U.S. government shutdown will reduce capital inflows.
ICICI Bank Ltd. (ICICIBC) and HDFC Bank Ltd. (HDFCB), the nation’s largest non-state lenders, increased more than 3 percent. Bharat Heavy Electricals Ltd. (BHEL) climbed the most in a week. Property developer DLF Ltd. surged 6.9 percent, halting a seven-day slide. Maruti Suzuki India Ltd. (MSIL) rose the most in two weeks after sales gained 12 percent last month. The rupee gained 0.3 percent, ending a two-day loss. The market is closed tomorrow for a holiday.
The S&P BSE Sensex climbed 0.7 percent to 19,517.15 at the close. The shortfall in the broadest measure of trade was $21.8 billion last quarter, less than the $23 billion median estimate in a Bloomberg survey. The U.S. began its first shutdown in 17 years amid a deadlock in the Congress over government spending plans and President Barack Obama’s health-care law.
“The deficit number is providing some comfort as it was the biggest overhang on the rupee,” Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries Ltd. in New Delhi, said by telephone. “The U.S. shutdown can disrupt flows to emerging markets, including India. Markets will remain volatile until the crisis is resolved.”
The fiscal and current-account shortfalls have driven the rupee down 12 percent in 2013 and last month prompted Standard & Poor’s to say there is more than a one-in-three chance India will lose its investment-grade rating within two years.
Foreign funds bought a net $2.1 billion of local equities in September, the first monthly net inflow since May, after the central bank Governor Raghuram Rajan outlined plans to bolster the rupee when he took charge Sept. 4 and the Federal Reserve decided to maintain economic stimulus. The currency has jumped 10 percent from a record low of 68.845 per dollar on Aug. 28.
ICICI Bank and HDFC Bank increased 3.1 percent to 910.75 rupees and 611.65 rupees. State Bank of India rose 1.8 percent to 1,643.35 rupees. The S&P BSE Bankex Index of 13 lenders rose 2.7 percent, ending a two-day, 4.6 percent decline.
Bharat Heavy surged 2.7 percent to 141.2 rupees. Larsen & Toubro Ltd. (LT), the largest engineering company, added 1.4 percent to 800 rupees. DLF rallied 6.9 percent to 136.90 rupees, paring this year’s loss to 41 percent. Maruti Suzuki rose 1.6 percent to 1,380.20 rupees.
The Sensex has risen 0.5 percent this year and trades at 13.5 times estimated 12-month profits, compared with the five-year average of 14.1 times. The MSCI Emerging Markets Index is trading at 10.4 times.
Global funds sold a net $84 million of domestic shares on Sept. 30, according to data released from the regulator today. They have purchased a net $13.4 billion of Indian equities this year, the second-highest among 10 Asian markets tracked by Bloomberg, after Japan.
The CNX Nifty (NIFTY) on the National Stock Exchange increased 0.8 percent to 5,780.05. India VIX, which gauges the cost of protection against losses in the Nifty, fell 3.3 percent.
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