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Indian Shares Advance as Inflation Slows; Tata Motors Rallies

India’s benchmark stock index rose the most in four weeks, paring its weekly loss to less than 0.1 percent, as inflation slowed to an eight-month low.

Tata Motors Ltd. (TTMT) soared the most in three months. Software exporter Infosys Ltd. (INFO) led its peers higher. Reliance Industries Ltd. (RIL), the owner of the world’s largest refining complex, gained the most in a month after winning bids for wireless spectrum. State Bank of India tumbled to a five-year low after posting a bigger drop in third-quarter profit than analysts had estimated.

The BSE S&P Sensex jumped 0.9 percent to 20,366.82 at the close, the most since Jan. 15. The gauge reversed an intraday loss of 0.2 percent. Wholesale-price index slowed in January by more than economists estimated, boosting scope to keep interest rates on hold. Governor Raghuram Rajan on Jan. 28 raised the policy rate, saying curbing inflation is key to support growth that’s estimated to hold below 5 percent for a second year. Another report this week showed consumer prices eased.

“We expect the Reserve Bank to hold rates in its next meeting,” Shishir Bajpai, director of wealth advisory at IIFL Wealth Management, said in a phone interview today. “Wholesale prices were expected to drop after retail inflation slowed. We expect the trend to continue.”

Higher borrowing costs have curbed demand. Factory output shrank 0.6 percent in December, a separate Feb. 12 report showed. The $1.8 trillion economy is expected to expand 4.9 percent in the year to March 2014, from 4.5 percent growth in the previous year, which was the slowest pace since 2003.

Tata Motors soared 3.4 percent, taking its weekly advance to 7.9 percent, the best performer on the Sensex. Infosys, Tata Consultancy Services Ltd. (TCS) and Wipro Ltd. (WPRO), the third-biggest software exporter, added 1.6 percent each.

Reliance Jio

Reliance, controlled by billionaire Mukesh Ambani, rallied 1.8 percent, the most since Jan. 13. Ambani’s Reliance Jio is aiming to make a foray into the country’s mobile-voice and data market. The company emerged as a potential rival to Vodafone Group Plc (VOD) and Bharti Airtel Ltd. (BHARTI) by winning bids in the auction.

Bharti gained 0.8 percent. The company is a “big spectrum winner,” CLSA Asia-Pacific Markets Ltd. said in a note today. The company’s auction wins ended uncertainty on renewal of its permit, the brokerage said. Idea Cellular climbed 0.7 percent.

The government raised almost $10 billion from the sale of wireless spectrum, higher than the minimum value of 490 billion rupees. Part of the money is due upfront, boosting Prime Minister Manmohan Singh’s push to pare the fiscal gap before the budget next week.

“The sale fetched the government more than what it had expected and that will strengthen the fiscal situation,” Anita Gandhi, an executive director at Arihant Capital Markets Ltd. in Mumbai, said by phone today.

Bad Loans

State Bank fell 1.7 percent to its lowest level since May 15, 2009. Net income fell 34 percent to 22.3 billion rupees for the December quarter amid rising bad loans. The lowest profit in nine quarters missed the 25.2 billion-rupee median of 38 estimates compiled by Bloomberg.

Twenty two of the 30 Sensex companies, or 73 percent, that have reported earnings for December quarter so far have beaten or matched analyst estimates, compared with 70 percent in the September quarter and 47 percent three months earlier.

Overseas funds bought a net $62.4 million of local shares yesterday, paring this year’s outflows to $241.3 million, data compiled by Bloomberg show. They invested $20 billion in 2013, the most in Asia after Japan, and $24.6 billion in 2012.

The CNX Nifty Index on the National Stock Exchange of India Ltd. climbed 0.8 percent to 6,048.35.

The Sensex (SENSEX) has slid 3.8 percent this year and is valued at 13.3 times projected 12-month profits, compared with the average multiple of 14.4 over the past five years. The MSCI Emerging Markets Index is valued at 9.3 times.

To contact the reporters on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net; Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

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

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