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India’s Sensex Index Advances Most in Two Weeks on Ambani Pact

May 24 (Bloomberg) -- India’s stocks advanced the most in two weeks after the billionaire Ambani brothers said they will end a family dispute over the division of assets and Citigroup Inc. raised its estimate for the nation’s benchmark equity index.

Reliance Industries Ltd., the country’s most valuable company controlled by Mukesh Ambani, rose 3.8 percent. Reliance Infrastructure Ltd., the builder of a mass rapid transit system in Mumbai controlled by his brother Anil Ambani, climbed to a three-week high. India’s benchmark stock gauge may rise 10 percent by year-end, Citigroup Inc. said in a report.

“India’s on a very strong wicket and earnings growth is intact,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai. The Ambani agreement “may boost investor sentiment.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 204.57, or 1.2 percent, to 16,650.18 at 9:05 a.m. in Mumbai. The S&P CNX Nifty Index on the National Stock Exchange rose 1.2 percent to 4,991.85. The BSE 200 Index increased 1.4 percent to 2,118.46.

Reliance Industries climbed 3.8 percent to 1,033 rupees. Reliance Infrastructure added 7.7 percent to 1,065 rupees. Reliance Communications Ltd., India’s No. 2 mobile-phone operator controlled by Anil, added 4.9 percent to 139.8 rupees.

Ambanis’ Accord

Mukesh Ambani, 53, and Anil, 50, among the world’s richest siblings, yesterday ended all non-compete accords reached in January 2006 and announced a new agreement barring competition in natural gas-based power generation. Their companies issued almost identical statements saying they were “hopeful and confident” of creating an “environment of harmony, co-operation and collaboration.”

The joint market value of Reliance Industries and the five Anil Ambani companies has more than tripled to at least $92 billion from $29 billion on Jan. 17, 2006, the day before the company split. The Sensex has gained 76.6 percent in the period.

Mahindra & Mahindra Ltd., the nation’s largest maker of sport-utility vehicles and tractors, rose 2.8 percent to 553.4 rupees. Tata Motors Ltd., the biggest truckmaker and owner of Jaguar Land Rover, climbed 2.3 percent to 726 rupees.

Citigroup is getting “more constructive” on Indian stocks, saying that domestic macroeconomic “headwinds” may have already peaked, Aditya Narain, an analyst at the brokerage, wrote in a report to investors. Narain raised his December target for the Sensex index to 18,100, without giving a previous forecast. Indian companies are also in “decent shape” and valuations are “not expensive,” according to the analyst.

Overseas investors sold a net 7.11 billion rupees ($152 million) of Indian equities on May 20, reducing their total purchases of stocks this year to 238.8 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.

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

To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net

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