Indian automakers and consumer companies advanced after the government said state-run banks will increase lending to the industries. The nation’s benchmark stock index rose for the fifth week in six.
TVS Motor Co., a motorcycle maker, jumped 8.5 percent. Tata Motors Ltd., the nation’s biggest automaker, rose 1.2 percent to a record after Deutsche Bank AG upgraded the stock. Blue Star Ltd., which manufactures air conditioners and water coolers, gained 1.5 percent, the most since Sept. 30. Drugmaker Dr. Reddy’s Laboratories Ltd. dropped 2.4 percent, the biggest decliner on the S&P BSE Sensex index.
The Sensex added less than 0.1 percent to 19,915.95 at the close in Mumbai, extending this week’s gain to 1 percent. The gauge changed directions at least 15 times. Increased lending in the auto and consumer durables industries will help boost demand, the government said in a statement after exchanges closed yesterday. Asian equities fell amid a budget impasse in the U.S., the world’s largest economy.
“Auto and consumer durable companies are moving up on the government’s measure to boost demand,” said Alex Mathews, the head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi.
The Sensex has advanced 2.5 percent this year and is valued at 13.7 times projected 12-month earnings, compared with the five-year average of 14.1 times. The index’s 50-day volatility measure, a gauge of price swings, reached the highest level in two years. The MSCI Emerging Markets Index is trading at 10.5 times forecast profits.
The U.S. Treasury warned yesterday that failure to raise the government’s $16.7 trillion debt limit before its borrowing authority expires on Oct. 17 may result in a recession as bad or worse than the 2008 financial crisis. BlackRock Inc.’s Laurence D. Fink and Pacific Investment Management Co.’s Bill Gross said the U.S. budget standoff will be resolved without a debt default.
The partial closing of the U.S. government for one week would shave 0.1 percentage point from economic growth, according to the median of 40 estimates in a Bloomberg survey of economists. The U.S. accounted for 13 percent of India’s exports in June, according to the commerce ministry.
“The larger picture remains cautious on the back of concerns over the U.S. debt ceiling,” said Kaushik Dani, a fund manager with Peerless Mutual Fund, which has about $725 million in assets.
TVS surged to 41.95 rupees. Tata Motors, maker of the Nano, the world’s cheapest car, rose to 350.05 rupees. Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles and tractors, gained 0.8 percent to the highest since Sept. 24. Motherson Sumi Systems Ltd., a supplier of wiring harnesses to carmakers, soared 5.8 percent to a record, leading gains on the S&P BSE Auto index, which climbed to the highest level since Jan. 15.
Blue Star rose to 145.50 rupees ending two days of losses. New Delhi-based PC Jeweller Ltd. soared 3.5 percent, leading the S&P BSE Consumer Durables index to its highest level since Sept. 25.
State Bank of India, the biggest lender, declined 0.6 percent. ICICI Bank Ltd., the second-biggest, dropped for the first time in three days. Dr. Reddy’s fell 2.4 percent to 2,371.70 rupees.
International investors sold a net $13.8 million of local stocks on Oct. 1, a third day of outflows, data from the market regulator showed yesterday. That pared this year’s purchases to $13.4 billion, the second-highest among 10 Asian markets tracked by Bloomberg.
The CNX Nifty on the National Stock Exchange lost less than 0.1 percent to 5,907.30. India VIX, which gauges the cost of protection against losses in the Nifty, surged 3.8 percent.