India’s Sensex Climbs to Record Ahead of Rate Decision Tomorrow

Indian stock advanced for a fourth day, with the benchmark index headed for a record ahead of the central bank’s monetary policy tomorrow.

State Bank of India rose to its highest level since July, pacing a rally among lenders. Bharti Airtel Ltd. (BHARTI), the nation’s largest mobile-phone operator, gained for a seventh day, its longest winning run streak in more than four years. NTPC Ltd., India’s biggest power producer, climbed the most in six weeks.

The S&P BSE Sensex (SENSEX) added 0.5 percent to 22,445.09 at 9:56 a.m. in Mumbai. The gauge is on course for the sharpest monthly increase in five months after foreign investors extended Asia’s largest equity-market inflows and the rupee strengthened to an eight-month high. Banks from Morgan Stanley to HSBC Holdings Plc expect the Reserve Bank of India to halt raising interest rates as inflation slows.

“Inflation has softened and in view of the improving economic scenario we believe the RBI has reasons to put rates on hold,” Hemant Kanawala, head of equities at Kotak Mahindra Old Mutual Life Insurance Ltd., which has $2 billion in assets, said in an interview to Bloomberg TV India today.

RBI Governor Raghuram Rajan, who increased the repurchase rate thrice since he took office in September, will maintain the benchmark at 8 percent, according to 34 of 36 economists surveyed by Bloomberg. Two see an increase to 8.25 percent. Consumer-price (INFUTOTY) gains cooled to 8.1 percent in February from 11.2 percent in November, the highest in at least two years, government data show.

The Sensex has risen 6 percent this quarter, beating stock indexes in Brazil, Russia and China, as improving government finances, cooling inflation and forecasts for a change in government after elections starting next month attract inflows. Foreign funds have plowed $9.3 billion into local shares and bonds this year, the most among eight Asian markets tracked by Bloomberg.

The rupee has rebounded 15 percent from a record low in August as global investors pour money into Indian assets. They bought a net $375.4 million of shares on March 27, a 12th day of inflows, data compiled by Bloomberg show. The Sensex trades at 14.1 times projected 12-month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index is valued at 9.9 times.

Indian banks and currency and money markets are shut today for a public holiday.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Ravil Shirodkar, Phani Varahabhotla

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.