Indian stocks rose for the third day, led by Reliance Industries Ltd. on speculation it will report higher earnings. State Bank of India gained after UBS AG upgraded the stock.
Reliance Industries, the nation’s largest company, advanced the most in three weeks. State Bank, the biggest lender, soared the most in more than eight months, after it was raised to “neutral” from “sell” at UBS by equity analyst Vishal Goyal.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, climbed 101.43, or 0.6 percent, to 17,573.99. The S&P CNX Nifty Index on the National Stock Exchange advanced 0.5 percent to 5,269.35. The BSE 200 Index increased 0.3 percent to 2,223.47.
“For the next two years we will have earnings growth which is above average,” said Anup Maheshwari, head of equities and corporate strategy at DSP BlackRock Investment Managers Pvt., which manages $3.7 billion in Indian equities. “When you have earnings growth at elevated levels, normally markets don’t tend to give deep corrections.”
Maheshwari recommended equities in financial services, information technology, capital goods and pharmaceutical companies, without naming specific shares.
Reliance Industries climbed 2.1 percent to 1,075.75 rupees amid speculation it will announce increased earnings tomorrow. Four of the 30 Sensex companies that have reported quarterly results so far have exceeded analysts’ expectations.
“We expect very good results from Reliance due to higher refining margins,” Ambareesh Baliga, vice president of equities at Karvy Stock Broking Ltd., said in Mumbai. “The result could help the stock cross the 1,135 rupees mark. The market momentum is continuing due to good earnings and money flow.”
State Bank of India jumped 5.6 to 2,223.1 rupees, its steepest advance since Aug. 13. UBS has a target price for State Bank of 2,220 rupees per share.
DLF Ltd., the biggest developer, lost 1.5 percent to 325.35 rupees. India’s central bank Governor Duvvuri Subbarao said he will do “everything possible” to prevent Asia’s third-largest economy from overheating.
“It’s a delicate balancing act by the central bank,” said Avinash Gupta, an analyst at Bonanza Portfolio Ltd., a New Delhi-based brokerage. “The government isn’t willing to sacrifice growth while at the same time cutting the fiscal deficit and controlling inflation. The stock market is likely to be choppy.”
Subbarao, who faces the challenge of reigning inflation without slowing growth, raised policy rates by a quarter percentage point on April 20 to slow price gains from a 17-month high. The move was judged by some economists as insufficient to control the highest consumer prices in the Asia-Pacific region. More than 25 percent of the economists surveyed by Bloomberg News had forecast half a percentage point increase.
“We are alert to the possibility of overheating,” Subbarao told analysts in a conference call from Mumbai yesterday. The central bank will ensure that “investment is supported, so, as demand is increasing, supplies are indeed ahead of demand, and we don’t have overheating.”
Tata Motors Ltd., India’s biggest truckmaker and owner of Jaguar Land Rover Ltd., climbed 3.4 percent to 836.65 rupees, its highest level since January 2007. A factory opening this month in western India to assemble the $2,500 Nano, the world’s cheapest car, may help the carmaker surpass Hyundai Motor Co. this year as the nation’s second-largest automaker. The plant in Sanand will start producing the Nano by April 30 and make up to 250,000 a year, said Debasis Ray, a spokesman.
Maheshwari expects earnings of Sensex stocks, excluding oil and gas companies, to grow 25 percent to 28 percent in the year through March 31. He forecasts above-average growth for automakers.
Overseas investors bought a net 325 million rupees ($7.29 million) of Indian stocks April 20, taking their total purchases of the equities this year to 256.3 billion rupees, according to the nation’s market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years earlier in domestic 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:
Dewan Housing Finance Corp. (DEWH IN) gained 3.5 percent to 226.95 rupees. The mortgage lender’s board approved the sale of shares for as much as 3.75 billion rupees to large investors, it said in a statement to the Bombay Stock Exchange yesterday.
EIH Ltd. (EIH IN) added 3.9 percent to 130.5 rupees. Oberoi Hotels & Resorts, India’s third-largest luxury chain, plans to open properties in New York, Paris and China after completing a $40 million makeover of its terror-hit Mumbai lodging this week.
United Spirits Ltd. (UNSP IN) fell 2.1 percent to 1,237.4 rupees. The nation’s biggest liquor maker was downgraded to “hold” from “buy” at Antique Stock Broking by equity analyst Abhijeet Kundu. The target price is 1,229 rupees per share. The company yesterday said net income climbed marginally to 568.5 million rupees in the fourth quarter from 556.2 million rupees a year earlier, according to a statement to the National Stock Exchange.