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Indian Stocks Post Third Weekly Gain as Singh Wins Retail Vote

Indian stocks rose for a third week as lawmakers in the parliament’s upper house today voted to endorse the government’s plan to allow overseas investment in the nation’s retail industry.

The BSE India Sensitive Index, or Sensex, ended the week with a 0.4 percent gain. The 30-stock gauge slid 0.3 percent to 19,424.1 at the close, erasing a 0.4-percent intraday advance notched before the voting results were announced. Sterlite Industries (India) Ltd., the biggest copper maker, lost 2.3 percent, the most on the gauge. Maruti Suzuki India Ltd. jumped to a 25-month high, pacing gains among peers, after a report that the largest carmaker will raise prices.

“It’s certainly a ‘sell on news’ trade as the market had already run up ahead of this event,” Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai, said by phone. “Investors will now look for cues from the industrial output and inflation data that’s due next week.”

The government is scheduled to release factory production data on Dec. 12 and inflation on Dec. 14.

The Sensex rallied 4.5 percent last week to a 19-month high as data showing economic growth slowed last quarter to match a three-year low stoked speculation the government will take more steps to boost growth and investment. Prime Minister Manmohan Singh in mid-September opened retailing and aviation to foreigners, and cut fuel subsidies in a burst of policy making aimed at reviving growth and averting a downgrade of the nation’s credit rating.

Vote Result

While 123 lawmakers voted in favor of the retail plan, 109 members voted against it, Hamid Ansari, chairman of the upper house of parliament, said today, adding the results are subject to correction. Lawmakers voted to back the proposal in the lower house on Dec. 5.

The September proposal to permit Wal-Mart Stores Inc. and other foreign retailers to own as much as 51 percent of stores selling more than one brand in India didn’t need parliamentary approval to become law. Still, Singh’s government agreed to a vote to end protests that were stalling legislative business.

“The direction is very clear that the government means to take this reform process ahead and that is clearly reflected in the optimism in the market,” Sunil Singhania, who oversees $16 billion as head of equities at Mumbai-based Reliance Capital Asset Management Ltd., said in an interview today.

The Sensex has risen 26 percent this year, fueled by fund flows and the policy announcements. Overseas investors were net buyers of local stocks for a 15th day yesterday, taking their net purchases in 2012 to $20.9 billion, the most among 10 Asian markets tracked by Bloomberg, excluding China, data compiled by Bloomberg show.

Auto Stocks

Maruti climbed 1.9 percent to 1,509.95 rupees, its highest close since Nov. 5, 2010. The company will raise prices of all its cars by up to 20,000 rupees ($367) starting January, the Press Trust of India reported, citing Mayank Pareek, chief operating officer for marketing and sales.

Mahindra & Mahindra Ltd., the largest maker of tractors and sport-utility vehicles, rose 1.1 percent to 939.20 rupees. Private equity fund Investindustrial trumped the automaker to buy a stake in Aston Martin, two people familiar with the matter said.

Sterlite slumped 2.3 percent to 113 rupees, its steepest drop in a month, following a 7.9-percent rally in the past two days. Reliance Industries Ltd., owner of the world’s largest refining complex, slid for the first time this week, losing 1.1 percent to 834.6 rupees.

Tata Consultancy Services lost 1.3 percent to 1,264.15 rupees and Tata Steel Ltd. slid 1.4 percent to 394.25 rupees.

Volumes in the Sensex exceeded the 30-day average by 15 percent, data compiled by Bloomberg show. Thirty-day volatility was at 10.92, compared with the year’s lowest reading of 9.06 set on Nov. 26, the data show. The Sensex is valued at 15.9 times estimated earnings, a nine-month high, compared with a multiple of 11.8 for the MSCI Emerging Markets Index.

The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. fell 0.4 percent to 5,907.40 while its December futures traded at 5,930.10. India VIX, which measures the cost of protection against losses in the Nifty, lost 1.8 percent to 14.96, the lowest level since Nov. 27.

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