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Sensex Rises to One-Week High as Infosys Gains Before Earnings

April 11 (Bloomberg) -- Indian stocks rose to a one-week high before data forecast to show inflation eased to the slowest in more than three years, and ahead of a quarterly earnings reporting season that begins tomorrow.

The S&P BSE Sensex gained 0.7 percent to 18,542.20, the highest level since April 3, at the close in Mumbai. Fifty-day volatility, a gauge of price swings, rose to the highest level since Nov. 19. Tata Motors Ltd. advanced the most in three months after sales at its Jaguar Land Rover unit jumped. ICICI Bank Ltd. increased 3.6 percent. Infosys Ltd., whose results tomorrow mark the start of the reporting season for the March quarter, also rallied 3.6 percent.

Consumer price growth slowed in March from a month earlier, according to a Bloomberg survey before data due tomorrow. Net income at about 43 percent of the 30 Sensex firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.

“A fall in the inflation rate and slowing growth will build a case for a 25 basis-point rate cut in the next policy meeting of the central bank,” Kaushik Dani, a Mumbai-based fund manager with Peerless Mutual Fund, which has about $870 million in assets, said by phone. “We are seeing buying in some large-cap shares ahead of the earnings season, as their earnings will be more or less in line with estimates.”

The Sensex advanced 1 percent yesterday after closing on April 9 at the lowest level since September. Foreign funds sold a net $114 million worth of Indian shares that day, a sixth day of net outflows or the longest stretch since May, data compiled by Bloomberg show. The sales cut foreigners’ net investments this year to $10.1 billion, which is still a record for the period, according to data compiled by Bloomberg. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg.

Slowing Inflation

Consumer prices may have risen 10.7 percent from a year earlier in March from almost 11 percent in February, a report tomorrow may show, while data on March 15 may show wholesale prices grew 6.3 percent, the least in 40 months, according to Bloomberg surveys.

Inflation above the Reserve Bank of India’s 5 percent “comfort level” has limited Governor Duvvuri Subbarao’s ability to reduce borrowing costs to revive an economy growing at the slowest pace in a decade. Subbarao last pared the repurchase rate by 25 basis points to 7.5 percent on March 19. The next policy review is scheduled for May 3.

India’s economy grew 4.5 percent from a year earlier in the last quarter of 2012, the weakest pace since 2009, and the government forecasts an annual growth rate of about 5 percent, the least in a decade.

The Sensex has dropped 4.6 percent this year and is valued at 12.5 times projected 12-month profits, compared with 13.5 times at the beginning of 2013. The MSCI Emerging Markets Index trades at 10.4 times.

Tata Motors jumped 3.8 percent to 278.15 rupees, the most since Jan. 9. ICICI Bank increased 3.6 percent to 1,040.2 rupees. Infosys climbed 3.6 percent to 2,916.7 rupees.

The 50-stock CNX Nifty Index rose 0.6 percent to 5,594. Its April futures settled at 5,594.80. India VIX, which measures the cost of protection against losses in the Nifty, gained 2.9 percent to 16.97.

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

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

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