Indian stocks rose to the highest in a month amid optimism the government will take measures to boost economic growth when parliament resumes this week, and as Germany backed the European Central Bank’s bond-buying plan.
Tata Consultancy Services Ltd., the nation’s largest software exporter, paced gains among its peers after Cognizant Technology Solutions Corp. raised its profit forecast and beat estimates. Tata Motors Ltd., the owner of luxury car brands Jaguar and Land Rover, rallied the most in seven weeks, and lender ICICI Bank Ltd. climbed to its highest since February.
The BSE India Sensitive Index, or Sensex, advanced 1.1 percent to 17,601.78 at the close, the highest level since July 10. German Chancellor Angela Merkel’s government supported the ECB’s bond-buying plan announced last week, a spokesman said, easing concerns the latest measures to contain the debt crisis may fail to calm euro-area turmoil. The European Union took in 17 percent of India’s exports in the April-to-September period last year, the commerce ministry said.
“Germany’s backing of the ECB’s plan has certainly boosted sentiment and globally, we are seeing more money being pumped into equities,” Vaibhav Sanghvi, director at Ambit Investment Advisors Pvt. in Mumbai, said by phone. “Investors in India are waiting to see what the government does before making any fresh calls.”
Indian parliament resumes tomorrow as the government bids to end two years of policy gridlock to bolster economic growth amid Europe’s crisis and elevated domestic inflation. India’s economy expanded 5.3 percent in the March quarter, the weakest pace in almost a decade.
Finance Minister Palaniappan Chidambaram yesterday said he will unveil measures to boost investments and work to revive investor sentiment. Policies will be “fine-tuned” to assist capital flows, he said, adding “corrective measures” will be taken on tax laws where necessary.
Asian stocks rose, led by exporters, as Germany’s decision to back ECB’s plan improved the outlook for Asia-Pacific exporters. The MSCI Asia Pacific Index headed for its highest close in three months.
The Sensex rose 2.1 percent last week, ending three weeks of losses. The gauge has climbed 14 percent this year and is valued at 13.6 times estimated earnings, helped by purchases by overseas investors.
Foreign investors purchased a net $103 million of stocks yesterday, taking their investment in domestic equities this year to $10.8 billion, data from the regulator show. That’s a record for the period and the highest net inflow in Asia this year, data compiled by Bloomberg show. The MSCI Emerging Markets Index that has risen 5.6 percent this year trades at 10.6 times estimated earnings.
Prime Minister Manmohan Singh has pledged to revive an economic reform agenda stymied by opposition from his own allies. India last year suspended a plan to allow Wal-Mart Stores Inc. and other foreign companies to open supermarkets, while an anti-corruption bill and proposals to allow foreign investment in aviation and pensions are also stalled.
Tata Consultancy surged 2.9 percent to 1,264.05 rupees. Rival Infosys Ltd. added 1.7 percent to 2,253.3 rupees. Wipro Ltd. increased 0.8 percent to 348.4 rupees.
Cognizant forecast profit of at least $3.38 a share this year, according to a statement. That compares with a previous forecast of at least $3.36. U.S.-based Cognizant maintained its full-year sales projection of at least $7.34 billion. Profit in the second quarter was 82 cents a share, beating the 80-cent average of 23 analyst estimates compiled by Bloomberg.
Tata Motors rallied 4.3 percent to 238.8 rupees, its highest close since July 11, and ICICI Bank, the largest private lender, climbed 2.1 percent to 974.3 rupees, the highest close since Feb. 21.
India VIX, which measures the cost of protection against losses in the S&P CNX Nifty Index, fell 0.1 percent to 16.21. The Nifty added 1 percent to 5,336.70. The BSE-200 Index rose 0.9 percent to 2,155.96. The top two bourses traded 675 million shares yesterday, 25 percent less than the 12-month daily average of 895 million shares.