Indian stocks advanced, with the benchmark stock index completing its ninth week of gains, as investors predicted company earnings will increase.
Reliance Industries Ltd., the nation’s biggest company by market value, rose. Housing Development Finance Corp., a mortgage lender, gained the most in more than six months. Foreign funds have been net buyers since Feb. 26. Analysts raised earnings per share estimates for the largest 30 companies by 30 percent over the past four weeks, according to data compiled by Bloomberg.
“Money will chase growth,” said Aneesh Srivastava, the Mumbai-based chief investment officer at IDBI Fortis Life Insurance Co., who manages $247 million in assets. “Our demographics are favorable.” Srivastava, who expects “good” quarterly earnings from companies and estimates 20 percent growth in profit for Sensex companies in the year through March, is increasing his holding of infrastructure, banking and capital goods companies. He declined to name specific stocks.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 218.74, or 1.2 percent, to 17,933.14. The gauge advanced 1.4 percent this week, its longest stretch of weekly gains since June. The S&P CNX Nifty Index on the National Stock Exchange rose 1.1 percent to 5,361.75. The BSE 200 Index increased 1 percent to 2,252.61.
Reliance Industries, owner of the world’s largest refining complex, advanced 1.6 percent to 1,124.7 rupees. The company discovered natural gas in four additional areas at its largest field that may boost domestic fuel supplies, two people familiar with the matter said. Manoj Warrier, a spokesman for Reliance, declined to comment.
Housing Development climbed 4.3 percent to 2,843.05 rupees, the most since Sept. 22. Jaiprakash Associates Ltd., a builder of dams, roads and bridges, gained 2.4 percent to 151.85 rupees, its biggest one-day advance in a week.
Expansion in Asia’s third-biggest economy after Japan and China is “consolidating,” central bank Governor Duvvuri Subbarao said March 22. Prime Minister Manmohan Singh aims to boost growth to 10 percent, a pace needed to pull 828 million people living on less than $2 a day out of poverty.
India’s manufacturing expanded for a 12th straight month in March, according to the Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics on April 1. A reading above 50 indicates a gain in factory production.
“Positive demographics and a rise in government and corporate spending will support growth in earnings,” Sukumar Rajah, who helps manage about $4 billion as chief investment officer of Asian Equities, Franklin Templeton Investments, said yesterday. Rajah reiterated the view that company earnings may expand 20 percent annually over the next three years.
Most Indian companies are due to report quarterly earnings in the next three weeks.
Bharat Heavy Electricals Ltd., India’s biggest power- equipment maker, advanced 2.9 percent to 2,563.7 rupees, its highest level since December 2007. Hero Honda Motors Ltd., the largest motorcycle maker, increased 2 percent to a record 2,056.95 rupees.
Tata Motors Ltd., India’s biggest truckmaker and owner of Jaguar Land Rover Ltd., soared 4.1 percent to 809.65 rupees, its biggest advance in five weeks. Vehicle sales rose 26 percent in the year through March, according to data released today by the Society of Indian Automobile Manufacturers in New Delhi.
Franklin Templeton Investments prefers Indian equities over Chinese peers because changes to market rules have given the South Asian nation “better corporate governance” and a “healthy” banking system, Rajah said.
India’s domestic savings rates as a percentage of gross domestic product, at 32.5 percent, has mostly risen in near tandem with emerging markets for a decade, compared with declines in developed nations.
“We have a slight bias toward Indian equities for the range of high quality companies available for investments in the stock market,” Rajah said. “India appears relatively less vulnerable to a sharp slowdown in developed economies.”
Overseas investors bought a net 4.18 billion rupees ($94 million) of Indian stocks on April 7, taking purchases this year to 241.1 billion rupees, according to the nation’s market regulator. The rupee is poised for its biggest weekly gain in three months after global funds bought $444 million more Indian equities than they sold in the first three days of this week.
Foreign funds have been net buyers for 24 straight trading days, the longest streak of inflows since August 2005, since Finance Minister Pranab Mukherjee pledged to trim the fiscal deficit from a 16-year high in the government’s Feb. 26 budget.
Inflows from overseas into India’s stock market reached a record 834.2 billion rupees in 2009, beating the high set two years earlier in local currency terms, as the biggest rally in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
The following were among the most active on the exchange:
Elecon Engineering Co. Ltd. (ELCN IN) rose 2.9 percent to 81.45 rupees. The material handling equipment maker has won orders worth 1.38 billion rupees, it said in an e-mailed statement.
Shree Ganesh Jewellery House Ltd. (SGJ IN), a jewelry maker and retailer, sank 37 percent to 164.55 rupees from the price it sold stock to the public in its first share sale. The company raised 3.73 billion rupees selling 14.3 million shares at 260 rupees apiece, according to data published by the Securities and Exchange Board of India.
Spanco Ltd. (SPAN IN) soared 4.7 percent to 91.25 rupees. The telecommunications solutions provider won a project worth 2.84 billion rupees from the Punjab State Electricity Board, it said in a statement to the Bombay Stock Exchange.