Indian Stocks Rise to 2-Week High; Drugmakers, Metal Shares Gain

April 2 (Bloomberg) -- Indian stocks advanced for a fourth day, with the benchmark index climbing to its highest level in two weeks. Drugmakers and metal producers led the gains.

The S&P BSE Sensex jumped 0.9 percent to 19,040.95, the highest close since March 18. Sun Pharmaceutical Industries Ltd., India’s largest drugmaker by value, rallied 4.8 percent to a record. Rival Cipla Ltd. rose 1.9 percent. Copper producer Sterlite Industries (India) Ltd. climbed 4 percent, rebounding from its steepest drop in 10 months yesterday, and Tata Steel Ltd. jumped 1.6 percent.

The Sensex plunged 5.3 percent in the past two months amid the country’s weakest economic expansion in a decade, widening deficits and the highest inflation among major emerging economies. The gauge’s 14-day relative strength index, which measures how rapidly prices climbed or fell in the period, was at 33.3 on March 25. Some investors see 30 as a signal to buy. The market was closed on March 27 and 29 for public holidays.

“The markets were oversold, so this bounce-back isn’t surprising,” Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai, said by telephone. “The positive newsflow for certain stocks contributed to the gains.”

Sterlite climbed to 93.10 rupees after India’s top court set aside a lower court’s order to shut its smelter. The Madras High Court in September 2010 ruled that the company’s 400,000 metric-ton smelter in the southern state of Tamil Nadu should be shut for breaching environmental standards. The company had challenged the decision in the top court the following month. The stock plunged 4.5 percent yesterday, the most since June.

Ambani Brothers

India’s billionaire brothers Mukesh and Anil Ambani agreed to share Reliance Communications Ltd.’s fiber-optic network in a 12 billion-rupee ($221 million) deal, their first venture since splitting their father’s business in 2005. The agreement will allow Reliance Jio Infocomm, a unit of Mukesh Ambani’s Reliance Industries Ltd., to use younger brother’s nationwide fiber-optic cable network to start a fourth-generation broadband service, according to a stock exchange filing today.

Reliance Communications, the mobile-phone operator that isn’t a Sensex member, surged 11 percent to 63.45 rupees, the most since July 2011. Shares of Reliance Industries, which have an 8.7 percent weighting in the Sensex, jumped 2 percent to 793.90 rupees, their biggest advance since Feb. 20.

Tata Steel added 1.6 percent to 319.70 rupees and aluminum maker Hindalco Industries climbed 1.6 percent to 93.15 rupees.

Construction Orders

Larsen & Toubro Ltd., the nation’s largest engineering company, jumped 1.9 percent to 1,425.40 rupees in its third day of gains. The company said today its construction division won new orders worth over 37 billion rupees across business segments in March.

A gauge of healthcare stocks was the biggest gainer among the 10 industry groups of the MSCI India Index. Sun Pharma rallied 4.8 percent to 851.30 rupees, making it the biggest gainer on the Sensex today. Cipla jumped 1.9 percent to 392.05 rupees, its highest close since March 11.

The Sensex is valued at 12.8 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.5 times. Volumes on the Indian gauge were 40 percent lower than the 30-day average today. The 50-stock CNX Nifty index rose 0.8 percent to 5,748.10 while its April futures settled at 5,766.60. India VIX, which measures the cost of protection against losses in the Nifty, sank 5.1 percent to 14.10.

Foreign funds bought a net $232 million worth of local stocks on March 28 and April 1, extending this year’s purchases to $10.4 billion, data compiled by Bloomberg show. The market was closed on March 27 and 29 for public holidays. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg.

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