Indian stocks advanced, with the benchmark index poised for its first monthly increase in three months. Hindustan Unilever Ltd. led consumer companies higher after posting profit that beat estimates.
The S&P BSE Sensex added 0.5 percent to 19,387.50 at the close in Mumbai, extending April’s gain to 2.9 percent. Volumes were 23 percent below the 30-day average. Hindustan Unilever, a unit of the world’s second-biggest consumer-goods maker, jumped the most in nine months after earnings exceeded estimates. Motorcycle maker Hero MotoCorp Ltd. climbed to a five-week high.
The Sensex has rebounded 6.4 percent from a seven-month low on April 9 as slowing wholesale-price inflation and a drop in gold and oil prices stoked speculation the central bank will cut borrowing costs this week. The authority may lower its key rate by 25 basis points at its May 3 review, according to the median of a Bloomberg economist survey. Imports of the two commodities fueled India’s record $32.6 billion current-account deficit in the last quarter of 2012, government data show.
“There’s a bit of positiveness creeping into sentiments of late because of the fall in commodity prices, which would have a beneficial impact on Indian corporates and on the macro economic factors if it sustains,” Vibhav Kapoor, group chief investment officer at IL&FS Investmart Financial, said in an interview to Bloomberg TV India today. “Things are somewhat better than what they were. The downside has got limited.”
Hindustan Unilever soared 7 percent to 484.4 rupees, ending a four-day decline. Fourth-quarter net income jumped 15 percent to 7.87 billion rupees ($145 million), beating the 7.6 billion rupees estimated by analysts. Cigarette maker ITC Ltd. added 1.8 percent to 324.65 rupees. The two companies have a combined 14 percent weighting on the Sensex.
Profit at just one of the 10 Sensex companies that have reported March-quarter results has trailed analyst estimates. Net income at about 43 percent of the 30 index firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.
Hero MotoCorp, which announced its results after markets closed on April 26, rallied 3.3 percent to 1,648.8 rupees, the highest close since March 22. Profit in the three months ended March fell 5 percent to 5.74 billion rupees, still beating the 5.02 billion rupees estimated by analysts.
Maruti Suzuki India Ltd., the nation’s biggest carmaker, rose 0.6 percent to 1,683.5 rupees, the highest close since September 2009. Maruti jumped more than 5 percent on April 26 after reporting earnings almost doubled in the March quarter. Mahindra & Mahindra Ltd., the largest maker of sport-utility vehicles, added 1.4 percent to 902.2 rupees.
Emerging-market stocks gained amid speculation monetary stimulus from India to the U.S. will bolster economic growth. The U.S. Federal Reserve will start a two-day policy meeting tomorrow after data last week showed the largest economy grew less than analysts forecast. The European Central Bank will cut rates when officials meet on May 2, according to the median of 69 economist estimates compiled by Bloomberg. The MSCI Asia Pacific Index has climbed 8.8 percent this year.
Gains in Indian stocks “is largely predicated on the fall in commodity prices and the general buoyancy in equity markets, especially in Japan and the U.S.,” P. Phani Sekhar, a fund manager at Angel Broking Ltd. in Mumbai, said in an interview to Bloomberg TV India today. “We have benefited from this.”
Bullion tumbled into a bear market April 12 and plunged 9.3 percent in the next session, the biggest drop in 33 years, while Brent oil slid below $100 a barrel April 16 for the first time since July. India ships in more than 80 percent of its oil and is the world’s largest bullion buyer.
Foreign funds bought a net $56 million of local shares on April 26, taking their net investment in stocks this year to $11 billion, data compiled by Bloomberg show. Inflows last year were $24.5 billion, the most among 10 Asian markets tracked by Bloomberg, the data show.
The Sensex trades at 13 times projected 12-month profits, compared with a multiple of 10.3 for the MSCI Emerging Markets Index. The Indian measure has fallen 0.2 percent this year amid concerns about slowing economic growth and a record current-account deficit that has deterred the RBI from further reducing rates after 25 basis-point cuts in January and March.
The 50-stock CNX Nifty Index rose 0.6 percent to 5,904.10 while its May futures settled at 5,918.20. India VIX, which measures the cost of protection against losses in Nifty, gained 3.2 percent to 14.33, ending three days of losses.