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Most Indian Stocks Climb as Capital Goods, Software Advance

Aug. 26 (Bloomberg) -- Most Indian stocks rose, with the benchmark index climbing for the third day, as producers of capital goods and software companies advanced.

Bharat Heavy Electricals Ltd. rallied for the fourth day, helping a gauge of machinery producers to its biggest three-day climb in about two months. Tata Consultancy Services Ltd., the nation’s largest software exporter, had the biggest three-day gain in more than a month. Hexaware Technologies Ltd. surged to an 11-month high after Baring Asia agreed to buy a stake.

About three stocks advanced for every that fell on the S&P BSE Sensex, which added 0.2 percent to 18,558.13 at the close in Mumbai. A gauge of volatility climbed to its highest level since December 2011. The Sensex retreated 12 percent from this year’s high on July 23 through Aug. 21 amid concern that steps to stem a record slide in the rupee will curb economic growth. The fall dragged its valuation to 12.7 times projected 12-month earnings on Aug. 21, the lowest reading in a month.

“There’s lot of bottom-fishing going on,” D.K. Aggarwal, managing director of SMC Investments & Advisors Ltd., said by phone from New Delhi. “We will see volatility as there’s no clear-cut direction, with the uncertainty over the rupee and the U.S. Fed’s policy.”

Bharat Heavy soared 6.7 percent to 123.9 rupees. The stock has rallied 22 percent in the past four sessions, after falling to an eight-year low on Aug. 20. The S&P BSE India Capital Goods Index rose 5.2 percent the past three sessions, the most since July 2. The gauge’s valuation fell to 12 times projected 12-month profits on Aug. 21, the lowest since January 2012.

Software Rally

Hexaware surged 6.1 percent to 128.15 rupees, its highest price since Sept. 20. Baring will spend as much as $260 million to buy the stake in the company, according to a Aug. 23 filing. Tata Consultancy added 0.7 percent to 1,842 rupees and Infosys Ltd., the second-largest software exporter, rose 1 percent to 3,030.7 rupees. Wipro Ltd. rallied 2.4 percent to 459.1 rupees.

India’s rupee has plunged 15 percent this year on concern the U.S. Federal Reserve will pare monetary stimulus, boosting repatriated earnings of exporters. Indian software companies get at least 80 percent of their revenue from abroad.

Asian stocks advanced for a second day after a slump in U.S. home sales eased speculation the Fed will trim economic stimulus next month. Asian nations are depleting their foreign reserves as they seek to buoy their currencies while investors pull billions of dollars from the region. The Reserve Bank of India said on Aug. 22 that the nation’s economic and monetary policies must focus on preserving financial stability.

Bond Purchases

The RBI began tightening monetary policy in July to slow depreciation in the currency. India’s central bank raised two interest rates on July 15 and curbed lenders’ access to cash. Policy makers also tightened limits on overseas investments by local companies and curbed gold imports. The RBI said Aug. 20 it will seek to limit increases in borrowing costs by buying long-dated government bonds.

Finance Minister Palaniappan Chidambaram said the nation won’t raise interest rates and that it’s too early to gauge the success of the steps to bolster the currency, the Times of India reported yesterday.

The Sensex has lost 4.5 percent this year and trades at 13.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10 times. The Indian gauge’s 15-day volatility was 27.5, the highest since Dec. 22, 2011.

The CNX Nifty index on the National Stock Exchange added less than 0.1 percent to 5,476.50. India VIX, which measures the cost of guarding against losses in the Nifty, rose 2.5 percent to 26.38.

International investors sold a net $118 million of local shares on Aug. 21, data from the regulator show. That cut this year’s inflow to $12.1 billion, the data show.

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

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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