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India’s Sensex Climbs to 14-Month High on Flows, Reform Optimism

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Oct. 1 (Bloomberg) -- India’s benchmark stock index rose to a 14-month high as foreign funds increased their holdings of domestic equities amid optimism the government will undertake measures to bolster growth.

The BSE India Sensitive Index, or Sensex, rose 0.3 percent to 18,823.91, the highest close since July 2011. Tata Motors Ltd., owner of Jaguar Land Rover, Infosys Ltd. and Jindal Steel & Power Ltd. gained at least 2 percent. The market is closed tomorrow for a public holiday.

Indian equities had their biggest monthly advance since January last month as foreign funds bought shares worth $3.6 billion through Sept. 27 amid a burst of policy announcements aimed at reviving an economy growing at near its slowest pace in three years. The government will consider easing investment rules for insurance companies, Finance Minister Palaniappan Chidambaram told reporters in New Delhi today.

“The market is headed for a record high, possibly by the year-end,” Chokkalingam G, chief investment officer at Centrum Broking in Mumbai, told Bloomberg TV India. “I’m expecting a few more policy reforms, increased foreign direct investments and a stronger rupee to drive the rally.” The Sensex closed at its highest ever level of 21,004.96 on Nov. 5, 2010.

The stock gauge increased 7.7 percent last month and has jumped 4.5 percent since Sept. 13 after Prime Minister Manmohan Singh ended a freeze on diesel prices to cut the budget deficit and opened retailing and airlines to foreigners the next day. Singh approved on Sept. 24 a plan to recast short-term loans held by state-owned utilities to help them meet power-supply commitments, extending the biggest policy push of his second term in office.

Record Flows

The Sensex has surged 22 percent this year, helped by the highest inflows among 10 Asian markets for which Bloomberg compiles such data, excluding China. Overseas funds bought a net $118.5 million of stocks on Sept. 27, raising investments into local equities this year to $15.9 billion, data from the regulator show. The flows pushed up the rupee 5.3 percent in the three months ended September, the strongest quarterly gain since 2009 and the best performance among Asian currencies.

The S&P CNX Nifty Index added 0.3 percent to 5,718.80 and its October futures closed at 5,758.75. The BSE-200 Index rose 0.4 percent to 2,317.6. The National Stock Exchange of India and the BSE Ltd. traded 1.1 billion shares on Sept. 28, 19 percent more than the 12-month daily average of 897 million.

Tata Motors, the maker of the world’s cheapest car, the Nano, increased 2.7 percent to 275 rupees. Infosys soared 3 percent to 2,609.65 rupees. Jindal Steel jumped 2.2 percent to 436.7 rupees.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net

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