Indian equities rebounded from the biggest drop in two weeks, led by software makers, as signs of improvement in the U.S. job market boosted the outlook for the nation’s exports.
The S&P BSE Sensex rose 1.2 percent to 19,410.84 at the close in Mumbai, with the gauge’s 50-day volatility climbing to a 14-month high. Tata Consultancy Services Ltd. and Infosys Ltd., India’s largest software makers who get more than half their revenue from North America, jumped at least 2.5 percent. Reliance Industries Ltd., owner of the world’s biggest refining complex, added 1.3 percent, ending a two-day decline. Cigarette maker ITC Ltd. soared the most in more than a year. The four stocks contributed 72 percent to the gains in the Sensex.
Asian stocks outside Japan climbed after better-than-estimated U.S. jobs data added to signs of recovery in the world’s largest economy, boosting the earnings outlook for exporters. The U.S. accounted for 11 percent of India’s exports in the year ended March 2012, government data show.
“Positive global news flow is driving the markets today,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in the southern Indian city of Kochi. “The rupee’s advance eased concerns a little.”
Infosys increased 2.6 percent to 2,468 rupees. Rival Tata Consultancy Services Ltd. jumped 3.3 percent to 1,538.3 rupees. Wipro Ltd., the third-biggest software maker, rose 1.8 percent to 349.65 rupees. Reliance gained 1.3 percent to 861.65 rupees. ITC, which has the highest weighting in the Sensex, soared 3.8 percent to 338.85 rupees, its highest close since May 31.
Hindustan Unilever Ltd. rose 2.3 percent to 601.4 rupees, a record, higher than the 600 rupees a share offered by parent Unilever Plc to increase its stake in the Indian unit to 75 percent. The $5.4 billion offer closed today.
The rupee strengthened 0.2 percent to 60.13 per dollar at the close, after dropping as low as 60.3850. The currency fell to a record 60.7650 on June 26 as global funds pulled $7.1 billion from local bonds and stocks last month after Fed Chairman Ben Bernanke said stimulus policies may end next year.
The Sensex has slid 4.3 percent from a two-year high set on May 17 and trades at 13 times projected 12-month earnings. The valuation narrowed to 12.5 times on June 24, the cheapest since April. The MSCI Emerging Markets Index trades at a 9.6 multiple, data compiled by Bloomberg show.
Overseas funds sold a net $97 million of Indian stocks on July 3, data from the market regulator show. That pared this year’s net inflow to $13.4 billion, a record for the period.
“There could be a temporary abatement in flows as people assess the forex situation, but the core story of a viable economy with a range of companies at attractive valuations is a great attraction for the long-only funds,” Saurabh Mukherjea, director of institutional equities at Ambit Capital in Mumbai, told Bloomberg TV India from London today. “Foreign inflows into Indian equities will continue to be strong.”
The CNX Nifty Index on the National Stock Exchange of India rallied 1.1 percent to 5,836.95.