Most Indian stocks climbed after Goldman Sachs Group Inc. said the country’s elections may fuel further gains in stocks. Rupee offshore forwards rose after data showed inflation eased.
About three stocks rose for every two that fell on the S&P BSE Sensex (SENSEX), which added 0.1 percent to 21,832.61 at the close. The 30-stock gauge earlier rallied 1.1 percent to an all-time high of 22,040.72. The U.S. bank raised India to overweight from marketweight, meaning investors should hold a higher proportion of the nation’s equities that are represented in benchmark indexes. The rupee gained as much as 0.5 percent in the spot market to the strongest level since March 11.
The Sensex has risen 3.1 percent this year amid speculation elections in May will deliver a government with the mandate to revive economic growth from a decade low. Wholesale prices rose 4.68 percent in February from a year ago, compared with 5.05 percent in the previous month and lower than the 4.9 percent median estimate in a Bloomberg News survey, according to data released on March 14.
“Liquidity has been very strong and the upgrade by Goldman Sachs will boost sentiment of foreign investors,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kollam in southern India.
Overseas investors have plowed $1.6 billion into domestic stocks and bought $6.3 billion of local debt, according to data compiled by Bloomberg.
Polls show the main opposition Bharatiya Janata Party is poised to oust the incumbent Congress party, a result that would be a “catalyst” for a long-term advance in the rupee toward 40 to 45 per dollar, Adam Gilmour, Citigroup Inc.’s Singapore-based head of Asia-Pacific currency and derivatives sales, said in a March 12 interview. A weak coalition might send the currency beyond August’s record low of 68.845, he said.
The rupee ended little changed from March 14 at 61.2050 per dollar in the spot market. It has rebounded 12.5 percent from its Aug. 28 record low. India’s markets were closed yesterday for a holiday.
“The momentum has been positive for the rupee amid good data,” said Vikas Babu, a trader at state-owned Andhra Bank in Mumbai. “I expect a status quo at the Indian central bank’s policy review after the recent rate hikes.”
Reserve Bank of India Governor Raghuram Rajan, who has increased borrowing costs three times since taking office in September, warned Feb. 23 that inflation remains the biggest threat to the economy, while saying that any central bank rate action will depend on data. The next review is due April 1.
Maruti Suzuki India Ltd. (MSIL) jumped 7.5 percent to a record after providing details of funding for a factory that will be wholly owned by parent Suzuki Motor Corp. (7269) and said it will seek minority shareholders’ opinion.
The S&P BSE Mid-Cap Index and the S&P BSE Small-Cap Index rallied 1 percent each.
State Bank of India rose 2.9 percent to its highest level since Jan. 3. Cigarette maker ITC Ltd., which has the highest weighting in the Sensex, jumped the most since Nov. 18.
Reliance Industries Ltd. (RIL), the owner of the world’s largest refining complex, rose 1.2 percent, sending the S&P BSE India Oil & Gas Index to its highest level in a year.
The Sensex is valued at 13.9 times estimated 12-month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index trades at 10 times, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards rose 0.2 percent today to 62.31 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.