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Indian Stocks Climb for Second Day Before Vote on Retail Policy

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Dec. 5 (Bloomberg) -- Indian stocks gained for a second day amid optimism the government will succeed in pushing its plan to allow foreign investment in the country’s retailing industry before lawmakers vote on the issue today.

The BSE India Sensitive Index, or Sensex, rose 0.2 percent to 19,391.86 at the close, holding at a 19-month high. Volumes in the measure exceeded the 30-day average by 25 percent, data compiled by Bloomberg show. Sterlite Industries (India) Ltd., the largest copper producer, rallied 5.3 percent as the metal jumped in London. Tata Steel Ltd. climbed 2.1 percent. Pantaloon Retail India Ltd. climbed to the highest close in more than a year.

“The market is certainly discounting that the government will be able to get this reform through,” Amit Khurana, director-research at Dolat Capital Market Ltd., said in an interview with Bloomberg TV India today.

Lawmakers will vote today on whether to back a government decision to allow overseas retail chains to enter India, with Prime Minister Manmohan Singh seeking a victory that may enable him to silence criticism of the biggest embrace of overseas investment in a decade. Offshore funds were net buyers of local shares for a 14th day yesterday, taking net purchases this year to $20.4 billion, the most among 10 Asian markets tracked by Bloomberg, excluding China, data compiled by Bloomberg show.

The Sensex has increased 25 percent this year, driven by foreign flows and policy measures announced by the government since September. The gauge rallied 4.5 percent last week as data showing economic expansion slowed last quarter to match a three-year low stoked speculation the government will take more steps to boost growth and investment.

Metal Stocks

Sterlite rallied 5.3 percent to 112.85 rupees, its highest close since Aug. 21. Tata Steel Ltd., India’s biggest producer of the metal, added 2.1 percent to 398.20 rupees, its highest level in almost a month. Aluminum producer Hindalco Industries Ltd. climbed 3.5 percent to 121.15 rupees.

Tata Motors Ltd., the owner of British luxury car brands Jaguar and Land Rover, rose 1.3 percent to 274.95 rupees. The company plans to set up joint ventures with South Korean firms, Financial Chronicle reported, citing an official.

Infosys Ltd., India’s second-largest software exporter, slumped 2.3 percent to 2,382.50 rupees, the most since Oct. 12. The stock will be replaced by Facebook Inc. on the Nasdaq-100 Index next week, Nasdaq OMX Group Inc. said.

Pantaloon jumped 3.3 percent to 237.65 rupees, the highest close since Sept. 22 last year. Shoppers Stop Ltd. surged 7.5 percent to 464.70 rupees, the highest since July 25, 2011, and Trent Ltd. part of the Tata group, rallied 4.8 percent to a record 1,274.35 rupees.

Policy Overhaul

Singh began the biggest policy overhaul in a decade in September to spur foreign investments to revive growth. Gross domestic product grew 5.3 percent in the quarter ended Sept. 30 from a year ago, down from 5.5 percent the previous quarter, government data showed last week.

While the September move to enable companies like Wal-Mart Stores Inc. to open stores doesn’t need parliamentary approval to become law, rejection of the proposals in today’s ballot would expose the weakness of Singh’s minority government and sap investor enthusiasm for the centerpiece of his policy drive.

Thirty-day volatility in the Sensex was at 10.92, compared with the year’s lowest reading of 9.06 set on Nov. 26, data compiled by Bloomberg show. The gauge is trading at 15.8 times estimated earnings, the highest level since February, compared with the MSCI Emerging Markets Index’s 11.8 times, according to data compiled by Bloomberg.

The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. added 0.2 percent to 5,900.50 while its December futures traded at 5,948. The BSE-200 Index gained 0.3 percent to 2,407.71. India VIX, which measures the cost of protection against declines in the Nifty, jumped 4.5 percent to 16.62, its highest level since Nov. 19.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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