India’s benchmark stock index rose for a fourth day to reach a six-week high, led by financial and auto companies on speculation interest rates will decline.
The S&P BSE Sensex advanced 1.2 percent to 19,406.85 at the close in Mumbai, its highest level since March 15. The market was closed yesterday for a holiday. Housing Development Finance Corp., India’s top mortgage lender, climbed 2.9 percent. ICICI Bank Ltd., the largest private lender, gained for an 11th day, its longest winning streak since 2005. Tata Motors Ltd. jumped 4.2 percent, leading gains among automakers.
Indian shares have rallied since plunging to a seven-month low earlier this month as slowing wholesale-price inflation and falling prices of gold and oil prompted speculation the Reserve Bank of India will lower rates next week. The RBI may cut its key rate by 25 basis points at a May 3 review, according to 18 of 22 economists surveyed by Bloomberg. Three forecast no change, while one expects a 50 basis point reduction.
“The central bank is likely to cut interest rates more aggressively,” Pratik Gupta, head of equities at Deutsche Equities India Pvt., told Bloomberg TV India in an interview today. “The fall in gold and oil prices paves the way for more rate cuts.”
HDFC climbed 2.9 percent to 862.75 rupees, its highest close since Dec. 11. ICICI Bank jumped 1.4 percent to 1,177.35 rupees, the longest stretch of gains since Sept. 20, 2005. It is due to report earnings tomorrow. State Bank of India gained 2.1 percent to 2,334.55 rupees.
Tata Motors, owner of British luxury car brands Jaguar and Land Rover, rallied 4.2 percent to 293.3 rupees, its highest close since March 14. Maruti Suzuki India Ltd., the nation’s largest carmaker, rose 3.6 percent to 1,590.95 rupees, and motorcycle maker Hero MotoCorp Ltd. jumped 2.8 percent to 1,617.75 rupees. Maruti and Hero are scheduled to report results tomorrow.
Jindal Steel & Power Ltd., India’s second-biggest maker of the alloy, posted fourth-quarter group profit of 7.6 billion rupees, missing the 9.7-billion rupee median estimate in a Bloomberg survey of 18 analysts. The stock slid 0.2 percent to close at 329.2 rupees before the results were declared.
Net income at one of the six Sensex companies that have reported March-quarter results so far has missed analyst estimates. Profits at about 43 percent of the 30 index companies trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.
Jet Airways (India) Ltd., which is not a Sensex member, surged 11 percent to 634.80 rupees, the highest close since January 2011. Etihad Airways PJSC agreed to buy a 24 percent stake in the Indian carrier for 20.6 billion rupees. Etihad will purchase 27.26 million shares at 754.74 rupees apiece, 32 percent higher than the closing price on April 23, Jet said in an exchange filing yesterday.
Drugmaker Dr. Reddy’s Laboratories Ltd. rallied 4.8 percent to a record 1,992.50 rupees. Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, climbed 3.1 percent to a record 979.6 rupees.
“We believe that a majority of the pharma companies will report strong fourth-quarter results, both on the topline and the bottom-line,” First Global Securities Ltd. wrote in a report dated April 23. The brokerage cited “strong” sales in the U.S., higher capacity utilization and an increase in revenue from emerging markets among reasons.
Foreign funds bought a net $83.6 million of Indian shares on April 23, taking their net investment in stocks this year to $10.69 billion, data compiled by Bloomberg show. Funds bought a net $292.1 million worth of equities last week, the most in five weeks. That helped the Sensex rally 4.2 percent, the most since the week ended Nov. 30.
The gauge is valued at 13.1 times projected 12-month profits, compared with a multiple of 10.4 times for the MSCI Emerging Markets Index. India’s inflation slowed to a 40-month low of 5.96 percent in March, government data showed April 15. A current-account deficit that widened to a record $32.6 billion in the December quarter, along with elevated prices, has deterred the RBI from further reducing borrowing costs after 25 basis-point cuts in January and March.
The 50-stock CNX Nifty Index on the National Stock Exchange of India Ltd. jumped 1.4 percent to 5,916.30 while its April futures, which expired today, settled at 5,917.30. India VIX, which measures the cost of protection against losses in Nifty, slumped 5.8 percent to 14.20.