India’s benchmark stock index rose for an eighth day, set for the longest stretch of gains in 15 months, as investors bought shares in companies that may benefit from accelerating economic growth.
Larsen & Toubro Ltd., the nation’s biggest engineering company, climbed to its highest in more than two years. Tata Power Co., the largest non-state electricity generator, advanced 1.2 percent. India’s economy can grow by as much as 10 percent annually in coming years, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said yesterday.
“More and more people are convinced that this domestic growth story will play out strongly and that 24 months down the road, these stocks will look cheap,” said Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries Pvt. “That’s why plenty of institutional money is flowing into the market now.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 65.67, or 0.4 percent, to 17,682.36 at 11 a.m. in Mumbai. The gauge has climbed 3.6 percent this week, poised for its biggest weekly advance this year. The S&P CNX Nifty Index on the National Stock Exchange rose 0.4 percent to 5,293.70. The BSE 200 Index increased 0.4 percent to 2,232.16.
Larsen & Toubro gained 2.2 percent to 1,815.9 rupees, poised for its highest close since February 2008. Tata Power advanced 1.5 percent to 1,279.95 rupees.
There’s a “clear signal” that India can achieve a forecast annual gross domestic product growth rate of between 9 percent and 10 percent, Rangarajan said yesterday. That compares with last year’s 7.4 percent pace.
Emerging market equities got the second-largest net inflows this year in the week to June 16 as investors’ risk appetite returned, EPFR Global said in an e-mailed statement. Fitch Ratings raised the credit rating outlook for local currency debt to “stable” from “negative” this week, citing India’s “strong growth prospects” and a reduction in the debt-to-gross domestic product ratio as the government collects higher-than-expected revenue.
Overseas funds bought a net 8.58 billion rupees ($186 million) of Indian equities June 16, increasing total purchases of the stocks this year to 249.7 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 ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.