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Indian Shares Rebound From Six-Week Low; Ranbaxy Rallies 28%

Indian stocks rallied the most in 15 days as some investors judged the recent declines that dragged the benchmark index to a six-week low was excessive.

Ranbaxy Laboratories Ltd., the nation’s biggest drugmaker, jumped 28 percent, the most on record, after reporting earnings that signaled sales in the U.S. were improving. Maruti Suzuki India Ltd. led a gauge of 11 automakers to its steepest climb in three weeks. Tata Steel Ltd. had its biggest two-day surge in about two years.

The S&P BSE Sensex rose 0.7 percent to 18,789.34 at the close. The gauge retreated 2 percent this week, its third straight week of losses, as the rupee’s plunge to a record spurred concern the central bank may tighten the money supply to support the currency. The Sensex’s 14-day relative strength index was at 31 yesterday, near the 30 reading that signals losses in the measure may be poised to end.

“We’re seeing a bounce back, especially in some of the beaten down sectors, given the sharp decline we had,” Pankaj Pandey, head of research at ICICIDirect, said in an interview to Bloomberg TV India today. “Fundamentally, things are still subdued. There may be stock-specific movement because of the earnings season.”

Ranbaxy surged 28 percent to 359.2 rupees, paring this year’s loss to 29 percent. The drugmaker reported profit of 1.35 billion rupees ($22 million) excluding foreign-currency related losses and one-time items, according to a filing yesterday. Brokerages including Kotak Securities Ltd. and Antique Stock Broking Ltd. raised their recommendation on the shares citing improving sales outlook at the company’s operations in North America, where it has been struggling with charges over the safety of its drugs.

Maruti, Mahindra

Maruti Suzuki jumped 4.1 percent to 1,385.05 rupees, its biggest rally since July 1. Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles, added 2.5 percent to 863.7 rupees. The S&P BSE Auto Index rose 1.4 percent, ending a five-day, 4.7 percent slide.

Prime Minister Manmohan Singh’s government may cut excise duties on vehicles to revive demand, according to Dimensions Consulting Pvt. Car sales declined for eight straight months through June amid slowing economic growth and expensive bank loans. The Reserve Bank of India on July 30 pared its growth forecast for the $1.8 trillion economy to 5.5 percent from 5.7 percent for the year ending March 31.

“There’s speculation that the government is on the verge of offering benefits for the auto sector,” Ajay Srivastava, managing director of Dimensions Consulting, said in an interview with Bloomberg TV India today.

Metals Rally

Tata Steel rallied 5.2 percent to 218.8 rupees, extending yesterday’s 4.9 percent surge, the biggest two-day gain since Aug. 30, 2011. Copper producer Sterlite Industries (India) Ltd. added 1.7 percent to 76.25 rupees. Hindalco Industries Ltd., the second-largest aluminum maker, soared 6 percent to 91.7 rupees, paring this year’s loss to 30 percent. The S&P BSE India Metals index rose for the second day, gaining 2.6 percent.

The Sensex is the third-worst performer in the past month among 94 indexes tracked by Bloomberg globally. It trades at 13.2 times estimated earnings for the next 12 months, compared with 9.9 times for the MSCI Emerging Markets Index.

The RBI raised money-market rates last month to support the rupee, which slid to a record of 61.8050 per dollar on Aug. 6. It increased two borrowing costs, restricted funding support for banks and raised lenders’ daily reserve norms. The rupee climbed 0.7 percent to 60.8613 today.

Foreign investors sold a net $41 million of local shares on Aug. 7, ending six straight days of purchases, data from the regulator show. That pared this year’s inflows to $12.5 billion.

The market is closed tomorrow for a holiday.

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