India Stocks Gain as Factory Output Data Ease Rate-Rise Concerns

Photographer: Dhiraj Singh/Bloomberg

An employee looks at a computer monitor at a brokerage firm in Mumbai. The Sensex has declined 2 percent this year amid a slowdown in manufacturing output, the fastest consumer-price inflation in at least two years and economic growth that’s stayed below 5 percent for four straight quarters. Close

An employee looks at a computer monitor at a brokerage firm in Mumbai. The Sensex has... Read More

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Photographer: Dhiraj Singh/Bloomberg

An employee looks at a computer monitor at a brokerage firm in Mumbai. The Sensex has declined 2 percent this year amid a slowdown in manufacturing output, the fastest consumer-price inflation in at least two years and economic growth that’s stayed below 5 percent for four straight quarters.

India’s benchmark stock index rose the most in seven weeks after factory output unexpectedly fell and U.S. jobs growth slowed, easing concern that the nations’ central banks will tighten monetary policy.

Infosys Ltd. (INFO) climbed, completing its biggest two-day gain in three months. Oil & Natural Gas Corp. (ONGC) increased for a third day, sending a measure of energy companies to its steepest gain in four weeks. ICICI Bank Ltd. (ICICIBC), the nation’s second-largest lender, rallied the most in a month.

The S&P BSE Sensex (SENSEX) added 1.8 percent to 21,134.21 at the close, the steepest gain since Nov. 25. Factory output dropped 2.1 percent in November from a year ago, data showed Jan. 10 after the markets closed, adding pressure on Prime Minister Manmohan Singh to boost the economy before elections this year. Consumer-price inflation slowed to 9.87 percent in November from 11.24 percent in November, below the median estimate of 10.06 percent, data released today after trading ended showed.

“Traders expect the Reserve Bank to hold interest rates again after the factory output data and as inflation is cooling off,” Akash Dharia, head of derivatives at ICICI Securities Ltd., said by phone. “Tapering talks have taken a backseat now after the U.S. jobs data and that is positive.”

Infosys jumped 3.2 percent to 3,665 rupees. The stock rose 2.9 percent on Jan. 10 after the software maker increased its annual sales forecast for a second straight quarter as economic recovery prompts clients in Europe to spend more. The two-day gain is the sharpest since Oct. 14.

‘High Conviction’

JPMorgan Chase & Co. yesterday raised the stock’s target price to 4,000 rupees, saying strong demand will help Infosys return to “healthy” growth. Tata Consultancy Services Ltd. (TCS) gained 3.9 percent to a record. Wipro Ltd. (WPRO), the third-biggest software exporter, rose to a 14-year high.

“Investors are doing follow-up buying in technology stocks after Infosys’ results due to higher conviction about improvement in their business,” ICICI Securities’ Dharia said.

India’s top three technology companies, which get most of their sales from overseas, were among the five largest gainers on the Sensex in 2013 as growth in developed nations and an 11 percent drop in the rupee boosted the outlook for their profits.

ICICI Bank jumped 3 percent and State Bank of India added 2.1 percent.

ONGC added 3.1 percent and Reliance Industries Ltd. (RIL) rose 2.6 percent. India may raise natural-gas prices to $7-$8 per million British Thermal Units from April, oil secretary Vivek Rae said yesterday. Tata Motors Ltd. (TTMT) advanced 2.5 percent, the biggest jump in a month, after its luxury-vehicle unit Jaguar Land Rover posted record global sales in 2013.

RBI, Fed

Reserve Bank of India Governor Raghuram Rajan last month surprised economists by holding the key rate at 7.75 percent instead of adding to increases totaling 50 basis points since taking office in September. The authority meets for its next policy review on Jan. 28.

U.S. employment rose at the slowest pace in three years in December, spurring speculation that the Fed won’t speed up its plan for trimming bond purchases, which have been a source of liquidity for most emerging markets. The central bank, which meets Jan. 28-29, in December announced a cut of $10 billion in its stimulus program to $75 billion from this month.

Global investors bought a net $16.2 million of domestic shares on Jan. 10, data from the regulator show. They invested $20 billion last year, the most in Asia after Japan, according to data compiled by Bloomberg. Net purchases in 2012 were $24.6 billion, the data show.

The CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. gained 1.6 percent to 6,272.75.

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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