Indian stocks advanced the most in a month after the goverment’s economic survey said growth is recovering. Industrial and energy stocks gained.
The S&P BSE Sensex index rose 0.7 percent to 19,152.41 at the close, the sharpest gain since Jan. 25, and volumes were 23 percent more than the 30-day average. Larsen & Toubro Ltd., the country’s biggest engineering company, climbed the most in five months. Reliance Industries Ltd., owner of the world’s largest refining complex, jumped 1 percent. Cigarette maker ITC Ltd. had the steepest gain in almost a month amid report it plans to raise prices.
The downturn in Asia’s third-largest economy may be over and the recent policy measures aimed at bolstering investment will yield faster growth, the survey said. Finance Minister Palaniappan Chidambaram, due to present the budget tomorrow, faces the task of narrowing the widest fiscal gap in major emerging nations to boost the central bank’s scope to reduce interest rates and avert a ratings downgrade.
“The FM knows India can’t afford a ratings downgrade and therefore we expect fiscal numbers in the budget to come out well, which the markets will like,” Mehraboon Jamshed Irani, principal and head of private client group at Nirmal Bang Securities in Mumbai, told Bloomberg TV India today.
The government will probably contain the budget deficit at about 5.3 percent of gross domestic product this fiscal year, the survey said. Chidambaram, presenting the government’s last full budget ahead of a general election due by 2014, has vowed to pare the fiscal gap to 4.8 percent of GDP in 2013-2014, from 5.3 percent this year.
Larsen advanced 3.2 percent to 1,409.65 rupees, the most since Sept. 21. ICICI Bank Ltd. rose 1.8 percent to 1,083.15 rupees, the most since Jan. 14. ITC gained 1.4 percent to 294.8 rupees, the sharpest advance since Jan. 29. Reliance gained 1 percent to 831.3 rupees, ending a two-day drop. Bharti Airtel Ltd., India’s largest cell-phone company, surged 3.2 percent.
The Sensex has fallen 4.7 percent from a two-year high set on Jan. 25 as net incomes at 43 percent of the 30 index members missed estimates in the December quarter, up from 40 percent in the previous two quarters, data compiled by Bloomberg show. Net outflows from mutual funds for eighth straight months through January contributed to the weakness in share prices.
The government has stepped up efforts to revive an economy growing at the weakest pace in a decade and cool inflation of almost 7 percent under policy changes since September. GDP may climb 6.1 percent to 6.7 percent in the year ending March 2014, from an estimated 5 percent in 2012-2013, the survey said. The expansion this fiscal year would be the slowest since 2002-2003.
The policy measures have prompted overseas funds to buy a net $8.3 billion of local equities this year, a record for the period, data compiled by Bloomberg show. They purchased $24.5 billion worth of stocks last year, the highest among 10 Asian markets tracked by Bloomberg, excluding China.
The Sensex is valued at 13.5 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.2 times, data compiled by Bloomberg show.
The CNX Nifty Index of the National Stock Exchange rose 0.6 percent to 5,796.90. India VIX, which measures the cost of protection against losses in the Nifty, fell 6.5 percent.