Indian equities climbed, with the benchmark index completing its biggest weekly advance in four months. Financial stocks and capital-goods makers led the gains.
ICICI Bank Ltd. jumped 7.2 percent, capping its best week in more than four years. Mortgage lender Housing Development Finance Corp. advanced for the third day. Engineering companies Larsen & Toubro Ltd. and Bharat Heavy Electricals Ltd. climbed more than 3 percent. The rupee strengthened for the third day.
The S&P BSE Sensex rallied 1.5 percent to 19,270.06. That took the week’s climb to 3.5 percent, the most since the five days ended April 19. Shares surged yesterday after the Reserve Bank of India Governor Raghuram Rajan announced plans to boost the financial sector and boost the rupee, which has dropped 16 percent this year. The central bank also eased rules for some stock purchases by foreign investors. Global funds bought the most shares yesterday since July 1, according to data from the regulator released today.
“There is optimism due to positive sentiments by the new RBI governor,” Gajendra Nagpal, chief executive officer at New Delhi-based Unicon Financial Intermediaries Ltd., said by phone today. “The rupee is strengthening and investors are now more convinced about the durability of the rally in equities.”
Rajan announced plans on Sept. 4 to make it easier for banks to open branches and lend to non-state sectors of the economy, measures that JPMorgan Chase & Co. analysts say will have a “major long-term impact” on bank profits. The RBI will also provide swaps for banks’ foreign-currency deposits that Bank of America Merrill Lynch estimates will boost the nation’s reserves by $10 billion. The S&P BSE India Bankex of lenders jumped by the most since May 2009 yesterday.
Overseas investors bought a net $167 million of domestic shares on Sept. 5, data from the regulator show. That boosted this year’s net inflow to $11.6 billion, the second-highest among 10 Asian markets tracked by Bloomberg. They pulled $3.7 billion from local equities in the three months to Aug. 31 as capital fled emerging markets amid prospects of the Federal Reserve paring its record stimulus.
ICICI Bank jumped 7.2 percent to 958.4 rupees, taking the week’s rally to 19 percent. The 13-member Bankex increased 2.9 percent, extending yesterday’s 9.3 percent surge. HDFC rose 1.4 percent to 760.85 rupees, a three-week high.
Larsen gained 3.6 percent to 754.1 rupees. Bharat Heavy Electricals added 5.6 percent to 142.25 rupees, taking the S&P BSE India Capital Goods Index to a three-week high.
The Sensex has retreated 0.8 percent this year in local currency terms and is valued at 13.7 times projected 12-month earnings, compared with the five-year average of 14.1 times, data compiled by Bloomberg show. It has lost 17 percent this year in dollar terms. The MSCI Emerging Markets Index trades at 10.2 times, the data show.
The CNX Nifty on the National Stock Exchange increased 1.6 percent to 5,680.40, its highest level since Aug. 14. India VIX, which gauges the cost of protection against losses in the Nifty, gained 0.4 percent.
The markets are closed on Sept. 9 for a holiday.