India’s Stocks Head for Best Gain Among Largest Emerging Markets

India’s (SENSEX) technology and drug stocks rose on speculation an improving U.S. economy will spur demand as the benchmark index headed for a second year of gains and the best performance among the four largest emerging markets.

Dr Reddy’s Laboratories Ltd. (DRRD) led a gauge of health-care companies to a record high. Tata Consultancy Services Ltd. (TCS), the country’s largest software exporter, rose 0.9 percent to extend its best annual performance in four years. Apollo Tyres Ltd. (APTY) climbed to a record after Cooper Tire & Rubber Co. (CTB) said it’s dropping plans to be bought by the Indian company.

The benchmark S&P BSE Sensex rose 0.2 percent to 21,185.64 at 11:22 a.m. in Mumbai. India’s biggest drugmakers and technology companies, which get most of their sales overseas, are the five-best performers on the Sensex in 2013. An 11 percent decline in the rupee and economic growth in developed nations has also boosted the outlook for exporters.

“Funds are buying to boost their portfolios before the year end,” Anita Gandhi, executive director at Arihant Capital Markets Ltd. (ACM) in Mumbai, said by phone. “Hopes of a faster U.S. economic revival are fueling a rally in drug and software exporters. Automobile stocks are gaining amid speculation of strong monthly sales data tomorrow.”

The Sensex has risen 9 percent in 2013. It trades at 13.6 times projected earnings for the next 12 months, compared with the MSCI Emerging Markets Index’s 10.5 times.

In the U.S., the Dow Jones Industrial Average reached an all-time closing high after the Federal Reserve announced plans to reduce the pace of bond buying amid faster-than-estimated economic growth. Manufacturing in the U.S. was at almost the highest since 2011 this month, the Institute for Supply Management is forecast to report next week.

Drugmakers Gain

Tata Consultancy, which has rallied 72 percent this year for the biggest gain among Sensex stocks, advanced to a two-month high. Rival Wipro Ltd. (WPRO), the second-best performer in the index, rose 0.7 percent.

Dr Reddy’s rose 0.2 percent to a one-week high. Cipla Ltd. (CIPLA) increased 0.7 percent. The S&P BSE Healthcare Index advanced 0.3 percent to an all-time high.

State Bank of India fell 0.1 percent to extend a 26 percent loss this year, the worst-performance on the benchmark index. Power equipment maker Bharat Heavy Electricals Ltd. (BHEL) slid 22 percent this year, the second-biggest loser on the index.

Bajaj Auto Ltd. (BJAUT) and Hero MotoCorp Ltd. (HMCL) each gained 0.7 percent today. The S&P BSE Auto Index added 0.4 percent.

The Sensex will probably climb to 23,200 next year, about 9.5 percent higher than the close on Dec. 27, according to the average of eight analysts’ predictions compiled by Bloomberg.

Global investors bought a net $65.1 million of local shares on Dec. 27, taking this year’s inflows to $19.9 billion, the most in Asia after Japan, data from the market regulator show. Net purchases last year were $24.6 billion, data compiled by Bloomberg show.

The CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. advanced 0.2 percent to 6,305.15.

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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