April 29 (Bloomberg) -- India’s stocks rose, rebounding from the steepest drop in almost three months, as investors judged that domestic growth will offset any global economic slowdown caused by European credit-rating cuts.
Sterlite Industries (India) Ltd., the biggest copper and zinc producer, gained for the first time in three days. Copper may rise in London after U.S. Federal Reserve officials restated their intention to keep borrowing costs near zero to boost growth following Standard & Poor’s cut of Greece’s credit rating to junk. State Bank of India, the biggest lender, climbed the highest in more than three months.
“Yesterday’s sharp correction has given investors an opportunity to buy,” said Gajendra Nagpal, chief executive officer of Unicon Financial Intermediaries Pvt. in New Delhi. “The problems of Europe will get addressed sooner rather than later. Investors sitting on cash are entering the market.” Nagpal advises investors to buy shares of metal companies and drug manufacturers.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 123.39, or 0.7 percent, to 17,503.47. The S&P CNX Nifty Index on the National Stock Exchange rose 0.7 percent to 5,254.15. The BSE 200 Index increased 0.7 percent to 2,216.99.
Sterlite climbed 1.2 percent to 823.25 rupees. Tata Steel Ltd., the biggest producer of the alloy, advanced 1.3 percent to 632.65 rupees. The price of copper may advance after the U.S. Dollar Index, a gauge against six counterparts, fell as much as 0.4 percent for the first decline in four days, making dollar-priced metals cheaper to other currency holders. Aluminum, lead, tin, nickel and zinc all gained.
State Bank gained 1.9 percent to 2,274 rupees, its highest since January 8. ICICI Bank Ltd., the country’s second-biggest lender, advanced 3 percent to 947.05 rupees, reversing a three-day decline. Axis Bank Ltd., the fourth-largest by market value, added 1.6 percent to 1,274.1 rupees.
“Banks are our biggest bet,” said Anand Shah, who oversees the equivalent of $291 million as head of equities at Canara Robeco Asset Management Co. in Mumbai, declining to name any because of his company’s rules. “In this volatile and crisis-driven world, if something is safe, it’s the Indian consumer.”
Financial companies will benefit from India’s high savings rate, Shah said. The savings rate as a percentage of gross domestic product is 32.5 percent. The ratio has mostly risen in tandem with emerging markets for a decade, compared with declines in developed nations. The Canara Robeco Equity Tax Saver fund has returned 262 percent over five years, 10th among 388 India equity funds tracked by Bloomberg over that period.
Stocks also gained after the nation’s food inflation slowed as Finance Minister Pranab Mukherjee said agriculture prices may cool further on prospects of sufficient rains this year. An index measuring wholesale prices of agriculture products including lentils, rice and vegetables compiled by the commerce ministry rose 16.61 percent in the week ended April 17 from a year earlier. It gained 17.65 percent the previous week, according to a statement in New Delhi today.
“Indications of softening food inflation are clearly visible,” Mukherjee told lawmakers in Parliament yesterday. “The outlook is further brightened by the fact that a normal monsoon is predicted this year.”
Mukherjee, who has been under attack in recent weeks from opposition parties for failing to curb price gains, vowed yesterday to almost halve the benchmark inflation rate to 5.5 percent by March 31. The weather office said last week the June-September monsoon rains, the main source of irrigation in India, will be “normal” after the showers last year were the weakest since 1972.
Return to Profit
Balaji Telefilms Ltd., a TV producer, rose 1.9 percent to 58.8 rupees after posting net income of 33.9 million rupees ($760,729) in the fourth quarter, compared with a loss of 146.3 million a year earlier. Truck maker Eicher Motors Ltd. soared 17 percent to 802.8 rupees after its profit in the three months through March more than doubled.
Central Bank Governor Duvvuri Subbarao on April 20 estimated India’s $1.2 trillion economy, Asia’s largest after Japan and China, will expand 8 percent “with an upward bias” in the year ending March 31.
Overseas investors bought a net 1.6 billion rupees of Indian stocks on April 27, taking their total purchases of the equities this year to 292.5 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:
Adani Power Ltd. (ADANI IN) soared 3.8 percent to 123.6 rupees. The power producer was added to Morgan Stanley’s so-called focus list, according to a note today from analysts including Ridham Desai.
Essel Propack Ltd. (ESEL IN) gained 2.9 percent to 49.65 rupees. The packaging company reported quarterly profit of 87 million rupees from a loss of 51 million rupees a year earlier.
LIC Housing Finance Ltd. (LICHF IN) jumped 4.6 percent to 943.65 rupees. The Mumbai-based financier may seek a banking license, the Economic Times reported, citing Chief Executive Officer R.R. Nair. Nair wasn’t immediately available to comment when called at his office.
Mindtree Ltd. (MTCL IN) plunged 10 percent to 575.4 rupees. Yogesh Aggarwal, an analyst at HSBC Securities and Capital Markets (India) Pvt., lowered his recommendation on the stock to “neutral” from “overweight,” citing lack of visibility in the information technology company’s outlook. Nishit Jasani, an analyst at JPMorgan Chase & Co., cut the stock to “underweight” from “overweight.”
SpiceJet Ltd. (SJET IN) rose 1.8 percent to 59.5 rupees. The discount carrier backed by billionaire Wilbur Ross may get a $40 million investment from U.S.-based investment fund Bravia Capital Partners, the Economic Times reported, citing sources it didn’t name. SpiceJet’s Chief Executive Officer Sanjay Aggarwal couldn’t immediately be reached at his office telephone for comment on the report.
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