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Sensex Jumps From Two-Week Low With Indian Rupee as Oil Retreats

Indian stocks climbed, with the benchmark index rebounding from a two-week low, after a decline in oil prices eased concern that inflation will accelerate.

Indian Oil Corp., the country’s biggest state-run refiner, led its peers higher. GAIL India Ltd. (SENSEX) rallied to its highest level since August 2011 on report that the gas supplier plans to buy stake in more shale-gas assets in the U.S. State Bank of India rose for a second day. The rupee halted a two-day retreat.

The S&P BSE Sensex added 1.4 percent to 25,368.90 at the close. The gauge slid 1.9 percent over the past four sessions on concern rising oil costs and predictions for weaker monsoon rainfall will hinder Prime Minister Narendra Modi’s efforts to cool inflation and boost growth. Brent crude fell for a third day amid speculation that Iraqi oil output won’t be disrupted by violence in OPEC’s second-largest producer. India imports around 80 percent of its oil requirements.

“We are in a structural bull run,” Ambareesh Baliga, managing partner of global wealth management at Edelweiss Financial Services Ltd. in Mumbai, said by phone today. “Any major correction should be utilized to buy.”

Indian Oil and Hindustan Petroleum Corp. soared the most since May 19. Bharat Petroleum Corp. rallied 4.7 percent. GAIL jumped 4.6 percent. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, increased 2.1 percent.

State Bank climbed 2.4 percent to its highest level since June 12. ICICI Bank Ltd. (ICICIBC), the biggest non-state lender, gained 1.8 percent. Mortgage lender Housing Development Finance Corp. (HDFC) jumped 2.6 percent to a record.

Tata Steel Ltd. (TATA), India’s biggest producer of the alloy, added 1 percent, while Bharat Heavy Electricals Ltd. (BHEL) advanced to its highest level since June 10.

Federal Budget

The Sensex has rallied 20 percent this year, the biggest gain among the world’s 10 largest markets, amid expectations Modi’s government will take steps to boost growth after winning the nation’s strongest electoral mandate in 30 years. Economic expansion is holding near a decade low and retail inflation has averaged about 10 percent in the past two years.

The new government is due to present its first federal budget on July 10. Modi has said he’s prepared to take unpopular steps to improve the nation’s economy and fiscal health.

“We continue to be bullish and expect reforms to drive markets to our year-end target of 27,000” for the Sensex, Jyotivardhan Jaipuria and Anand Kumar, analysts at Bank of America Merrill Lynch, wrote in a note today.

Overseas investors sold a net $35 million of Indian shares on June 20, paring this year’s inflows to $9.87 billion. That’s still the most among eight Asian markets tracked by Bloomberg. They purchased a net $47 million of shares today, according to provisional data from the National Stock Exchange Ltd.

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, Dick Schumacher

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