Feb. 9 (Bloomberg) -- Indian stocks rose to a six-month high, erasing losses, as Greek leaders neared an agreement on further spending cuts needed to receive a rescue package.
HDFC Bank Ltd., the second-biggest private lender, climbed to a record. Infosys Ltd., which gets more than a fifth of its revenue from Europe, gained to near a one-month high. Sterlite Industries (India) Ltd. rallied to a three-month high, the most among 30 companies on the benchmark BSE India Sensitive Index.
The Sensex advanced 0.7 percent to 17,830.75 at 3:30 p.m. close, its highest since Aug. 3, erasing an intraday loss of 0.6 percent. The Stoxx Europe 600 Index added 0.5 percent as investors speculated that Greece will accept the spending cuts needed to obtain further aid. A collapse of Greece’s economy could spark a new round of contagion in the euro area, India’s biggest trading partner, and damp flows of foreign funds that fueled a record surge in the the nation’s equities last month.
“We’ve seen quite a bit of flows as investors turn their perception to the European crisis potentially being resolved in the near term,” said Sailesh K. Jha, Singapore-based head of Asia markets strategy at Skandinaviska Enskilda Banken AB, in an interview with Bloomberg UTV. “Investors are finally paying more attention to the macro-economic fundamentals of the world and India in particular.”
Foreign funds have invested a net $3.7 billion in Indian stocks this year, compared with an outflow of $512 million in 2011, data from the regulator show. The flows have fueled the 15 percent rally in the Sensex, helping the gauge recoup more than half of its 2011 losses. The measure trades at 15.8 times future earnings, compared with 19.4 times at end of 2010. The MSCI Emerging Markets Index trades at 10.5 times.
Greek Prime Minister Lucas Papademos and the leaders of the three parties supporting the government “agreed on all the points of the program with the exception of one which requires further elaboration and discussion” with lenders, according to an e-mailed statement from the premier’s office. They failed to resolve a dispute over pension cuts.
The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. jumped 0.8 percent to 5,412.35. The BSE 200 Index rose 0.9 percent to 2,190.1, the highest level in six months.
HDFC Bank rose 2.8 percent to 522.6 rupees, the highest price since its trading debut in 1995. The stock has jumped 22 percent this year, after falling 9 percent in 2011. ICICI Bank Ltd., the nation’s biggest non-state lender, added 2.1 percent to 939.8 rupees, the highest price since Aug. 12. State Bank of India, the country’s largest, rose 0.3 percent to 2,184 rupees, a six-month high.
Infosys jumped 1.5 percent to 2,809.9 rupees, the highest since Jan. 11. Sterlite added 4.8 percent to 130.1 rupees, the highest close since Oct. 28.
Hindalco Industries Ltd., India’s second-largest aluminum maker, reported better-than-expected profit for the third time in four quarters as higher copper treatment and refining fees offset falling metal prices. Net income, excluding unit Novelis Inc., slid 2 percent to 4.51 billion rupees in the three months ended Dec. 31, the company said today. The median estimate of 25 analysts in a Bloomberg survey was 4.39 billion rupees. The stock, which sank 7.5 percent before earnings were announced, pared losses closing down 1.1 percent at 159.1 rupees.
Tata Steel Ltd. rose 0.3 percent to 452.2 rupees. India’s biggest steelmaker may report today quarterly profit of 2.57 billion rupees, according to the median estimate of 28 analysts surveyed by Bloomberg. That compares with 9.65 billion rupees in the same period last year.
Tech Mahindra Ltd. added 1.4 percent to 659.3 rupees after the Indian software maker posted a net income of 2.76 billion rupees, exceeding the median analyst estimate of 2.14 billion.
Ten out of 20, or 50 percent, of Sensex companies have posted December-quarter profits that missed analyst estimates, compared with 40 percent in the September quarter.
India’s economy will probably expand 6.9 percent in the year ending in March, the government said on Feb. 7, less than the median estimate of 7 percent in a Bloomberg survey. Growth slowed after the central bank raised rates by a record amount from 2010 until October to fight inflation and as Europe’s debt crisis added to the government’s struggle to lure investment.
“The recovery in India has been driven by expectations for a favorable monetary environment and a gradual improvement in the outlook for corporate performance,” Sharat Shroff, who manages $5.7 billion at Matthews International Capital in San Fransisco, said in an e-mail interview. The money manager is “overweight” on consumer products and industrial sectors, he said, favoring medium and small-sized companies.
The BSE Mid-Cap Index gained 1.3 percent to 6,239.6, the highest level in more than three months. The gauge has jumped 22 percent this year, after sinking 35 percent in 2011. The BSE Small-Cap Index is up 24 percent in 2012, rebounding from a 42 percent plunge in 2011.
Reserve Bank Deputy Governor Subir Gokarn said on Feb. 2 the authority will reduce borrowing costs once it’s confident consumer prices will keep slowing. Inflation dropped to 6.68 percent last month, from 7.47 percent in December, according to the median estimate of six analysts in a Bloomberg survey. That would be the slowest since November 2009. The data is due Feb. 14. The central bank holds its next policy review on March 15.
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