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Indian Stocks Rise for Third Day; Mahindra, Reliance Advance

India’s benchmark stock index rose to the highest level in a week after a report showed factory output grew at close to a record pace, fanning speculation company earnings will benefit.

Mahindra & Mahindra Ltd., the nation’s largest maker of sport-utility vehicles and tractors, climbed to its highest in at least 19 years. India’s industrial production grew 17.6 percent in April, faster than the 14.3 percent median estimate of 24 analysts in a Bloomberg survey. Reliance Industries Ltd., India’s most valuable company, soared the most in a month on speculation that it’s looking to buy shale gas assets in the U.S. and after saying it discovered more oil.

“The numbers signify that there’s strong demand for consumer durable and capital goods,” said Manish Sonthalia, who helps manage the equivalent of $200 million in equities at Motilal Oswal Securities Ltd. in Mumbai. Sonthalia, who declined to say what he’s buying and selling, predicts Sensex company earnings will grow by about an average 25 percent in the year through March.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained for a third day, adding 142.87, or 0.8 percent, to 17,064.95, paring the week’s loss to 0.3 percent. The S&P CNX Nifty Index on the National Stock Exchange rose 0.8 percent to 5,119.35. The BSE 200 Index added 0.5 percent to 2,166.32.

Mahindra

Mahindra gained 2.4 percent to 606.7 rupees, its highest level since at least January 1991.

Output at factories, utilities and mines rose close to December’s record 17.7 percent, today’s statistics department report showed.

Bharat Heavy Electricals Ltd., India’s biggest power- equipment maker, gained 2.9 percent to 2,392.75 rupees, its steepest advance in three months. Grasim Industries Ltd., a maker of viscose staple fiber that’s used to make tires and textiles, surged 2.8 percent to 1,819.6 rupees.

Reliance Industries jumped 3.1 percent to 1,046.4 rupees. The company is considering buying a stake in shale gas assets owned by Pioneer Natural Resources Co. in the U.S., two people with knowledge of the matter said. Separately, Reliance is considering buying energy assets from U.S.-based East Resources Inc., the Financial Express reported, citing people it didn’t identify. Manoj Warrier, a spokesman for Reliance Industries, declined to comment when reached by telephone today.

Oil Find

Reliance also found additional oil in a block in the western state of Gujarat and is assessing the viability of the find that may help increase domestic fuel supplies.

Standard Chartered Plc slipped 0.5 percent to 103.45 rupees in its trading debut, below the 104 rupees offer price as the U.K. lender became the first company to sell Indian Depository Receipts.

Overseas investors sold a net 17 million rupees ($360,000) of Indian stocks yesterday, paring their purchases of the equities this year to 217.6 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.

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