Most Indian Shares Advance; State Bank Climbs as TCS Retreats

Most Indian stocks climbed after the growth in monthly consumer prices lagged behind forecast.

State Bank of India, the nation’s biggest lender, paced gains among its peers. Inflation quickened to 9.44 percent in June from 9.06 percent in May, the government said. The rate is less than the 9.68 percent median estimate of 28 economists in a Bloomberg News survey. Bajaj Auto Ltd., the second-largest motorcycle maker, retreated 1.5 percent after its first-quarter profit increased less than estimates. Tata Consultancy Services Ltd., the largest software services exporter, declined ahead of its quarterly earnings report later today.

The Bombay Stock Exchange Sensitive Index, or Sensex, rose 22.18, or 0.1 percent, to 18,618.20 at the 3:30 p.m. close in Mumbai. Three shares climbed for every two that dropped on the gauge. The gauge earlier rose as much as 1.1 percent. The S&P CNX Nifty Index gained 0.3 percent to 5,599.80 and its July futures settled at 5,585.10.

“People were expecting inflation to climb but it came slightly below estimates,” said Kaushik Dani, a Mumbai-based fund manager at Peerless Mutual Fund, which holds $1.1 billion in stocks and bonds. “It was a consolation.”

The Sensex is the second-worst performer this year among major indexes in the world’s 10 biggest markets as the Reserve Bank of India raised borrowing rates to cool inflation. Stocks on the measure are valued at 15.1 times estimated earnings, compared with 10.9 times for the MSCI Emerging Markets Index.

The central bank has raised its repurchase rate 10 times since the start of last year and the next policy review is on July 26. Inflation has been above 8 percent since January 2010.

Fuel Costs

Inflation accelerated in June because of an increase in diesel costs and higher prices of minerals and manufactured products, Finance Minister Pranab Mukherjee said in a statement today. The government is working with the central bank to take “appropriate” steps to cool prices.

Interest rates are “peaking out” and the central bank has been “fairly” successful in moderating growth, Morgan Stanley’s India Managing Director Ridham Desai said in an interview to Bloomberg UTV today. The brokerage is “more positive” on emerging markets for the second-half of 2011.

State Bank increased 1.5 percent to 2,467.1 rupees, its steepest gain since July 7. ICICI Bank Ltd. rose 1.4 percent to 1,069.051 rupees. Housing Development Finance Corp., the biggest mortgage lender, rose 1.4 percent to 703.6 rupees.

DLF Ltd., the biggest developer, surged 3 percent to 233.9 rupees, paring this year’s loss to 20 percent. Unitech Ltd., the second-biggest, jumped 4.6 percent to 33.95 rupees.

Autos Rally

Tata Motors Ltd., the top truckmaker, added 2.1 percent to 1,068.1 rupees, the highest since June 1. Mahindra & Mahindra Ltd., the largest maker of sport-utility vehicles and tractors, advanced 1.2 percent to 715.25 rupees. Larsen & Toubro Ltd., the largest engineering company, added 1 percent to 1,818.45 rupees and its July futures settled at 1,812 rupees.

Bajaj Auto decreased 1.5 percent to 1,430.7 rupees. Net income in the quarter ended June 30 increased to 7.11 billion rupees ($160 million) from 5.9 billion rupees a year earlier. That compares with the 7.4 billion rupee median of 18 analyst estimates compiled by Bloomberg.

“Higher raw material costs impacted profitability,” said Umesh Karne, a Mumbai-based analyst with Brics Securities Ltd. who has a ‘buy’ rating on the stock. “Bajaj Auto’s sales will continue as demand remains strong, both in the export markets as well as the domestic market.”

Infosys Ltd., the second-largest software maker, slid 1.3 percent to 2,740.35 rupees, extending its five-day loss to 8.5 percent. The company July 12 projected sales in the year ending March to range from $7.1 billion to $7.3 billion, less than the $7.5 billion average of 56 estimates compiled by Bloomberg.

TCS Earnings

Tata Consultancy plunged 2.2 percent to 1,123.7 rupees and its July futures settled at 1,123.40 rupees. Profit may climb 23 percent to 22.6 billion rupees, according to the median estimate of 21 analysts surveyed by Bloomberg News.

Overseas funds sold a net 9.17 billion rupees ($205.3 million) of Indian stocks on June 12, paring their investment in equities this year to 86.6 billion rupees, according to data on the website of the Securities and Exchange Board of India. Foreigners turned net sellers for the first time in 14 sessions.

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