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India’s Sensex Advances as Rupee Climbs, Materials Stocks Rally

Indian stocks climbed the most in two weeks, led by materials producers, amid speculation a strengthening rupee will lure foreign investors.

Coal India Ltd., the world’s biggest miner of the fuel, gained the most in a week after reporting September sales that beat its target. Iron-ore miner Sesa Goa Ltd. soared 7.4 percent. Tata Consultancy Services Ltd. gained the most in a month after Goldman Sachs Group Inc. raised its recommendation on the stock. The rupee strengthened 1.1 percent to 61.79 per dollar, the highest level since Sept. 19.

The S&P BSE Sensex Index surged 2 percent to 19,902.07 at the close in Mumbai, the biggest gain since Sept. 19. A stronger rupee may lead to more portfolio inflows and foreign direct investment, according to Centrum Wealth Management Ltd. Infosys Ltd., the nation’s second-largest software services provider, will be the first Sensex company to report earnings for the quarter ended September on Oct. 11.

“The rupee stabilizing at 62 is giving some comfort to investors,” Chokkalingam G, chief investment officer at Centrum, which oversees 1.4 billion rupees, said by phone today. “Metal shares were beaten down and investors are seeing value.”

The benchmark index has added 2.5 percent this year and trades at 13.7 times estimated 12-month profits, compared with the five-year average of 14.1 times. The Sensex’s 50-day volatility index, a measure of price movements, increased to the highest level since November 2011 today.

Earnings Season

The rupee gained today as U.S. lawmakers’ failure to resolve a budget impasse that has shut down the government for the past two days damped demand for the dollar. The currency has rallied from a record low on Aug. 28 after Reserve Bank of India Governor Raghuram Rajan introduced measures to boost the financial industry and support the currency, and the U.S. Federal Reserve refrained from curtailing stimulus.

A 16 percent drop in the rupee in the past 12 months is helping improve the competitiveness of Indian exports. The nation’s shipments rose 13 percent in August from a year earlier, the most since October 2001, while imports dropped 0.7 percent, government data showed Sept. 10. India’s $1.8 trillion economy may grow 5.5 percent in the year to March 2014, according to central bank estimates. Gross domestic product expanded 5 percent in the previous 12 months, the weakest pace since 2003.

Materials Stocks

Coal India increased 1.6 percent to 302.35 rupees, paring this year’s loss to 15 percent. September sales were 35.8 million metric tons, compared with a target of 34.8 million tons, the company said on Oct. 1.

Sesa Goa surged to 188.15 rupees. Tata Steel Ltd., the biggest producer of the alloy, rose 3.7 percent to 285.85 rupees. The S&P BSE Metal index gained 3.9 percent, the most since Aug. 22 and the best performer today among 13 sectoral gauges tracked by BSE Ltd.

Axis Bank Ltd. jumped 5.8 percent to 1,104.70 rupees, cutting this year’s loss to 19 percent. ICICI Bank Ltd., the country’s second-biggest lender, rose 3 percent to 937.85 rupees. HDFC Bank Ltd., the biggest lender by value, added 4 percent to 636.20 rupees. The Bankex Index gained 3.4 percent, its largest advance since Sept. 19.

Tata Consultancy Services advanced 3.9 percent to 2,024.60 rupees. Goldman Sachs raised its rating on the stock to buy from neutral on improved earnings prospects, the bank said in a report dated yesterday, while New York City awarded the company naming rights to its annual marathon. Infosys added 0.7 percent to 3,037.15 rupees, the highest close since Sept. 12.

The CNX Nifty on the National Stock Exchange soared 2.2 percent to 5,909.70. India VIX, which gauges the cost of protection against losses in the Nifty, lost 2.3 percent.

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