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Indian Stocks Rise to 3-Week High as Trade Deficit Narrow

Oct. 9 (Bloomberg) -- India’s benchmark stock index rose to a three-week high after data showed the trade gap narrowed to the lowest level in 30 months.

Sun Pharmaceutical Industries Ltd., which gets more than half of its sales from abroad, climbed to a record. Software exporter Infosys Ltd. increased the most in a month. HDFC Bank Ltd. jumped to a three-week high. Property developer DLF Ltd. surged 6 percent after it sold a stake in a unit to Japan’s LIXIL Corp. The rupee touched a one-week low.

The S&P BSE Sensex added 1.3 percent to 20,249.26 at the close, erasing an intraday drop 0.8 percent. The nation’s trade gap narrowed to $6.76 billion last month, the least since March 2011, from $10.9 billion in August, data today showed. Reserve Bank of India Governor Raghuram Rajan yesterday said he expects an improvement in the economic performance as exports and major investment projects revive. Rajan Oct. 7 eased liquidity curbs imposed in July after the rupee rebounded from a record low.

“The data has raised hope that there could be some more liquidity-easing measures, and may be a pause in interest rate increases,” K.K. Mital, a portfolio manager at Globe Capital Market Ltd., said by phone from New Delhi.

Rajan, governor since last month, began the relaxation in his first policy review on Sept. 20, when he also raised the benchmark repurchase rate to tackle consumer-price inflation of more than 9 percent. The currency has climbed about 11 percent from a record low on Aug. 28, paring its decline over the past year to 15 percent. The rupee weakened as low as 62.305 per dollar today, the weakest level since Oct. 1.

Sun, TCS

Sun Pharmaceutical rallied 5.1 percent to 645.35 rupees, extending this year’s gain to 75 percent, the most among the 30 companies on the Sensex. Infosys, the first Sensex company due to report quarterly earnings on Oct. 11, added 2.5 percent to 3,109.85 rupees. Rival Tata Consultancy Services Ltd. added 1.4 percent to 2,090.85 rupees. The S&P BSE Infotech index climbed 1.5 percent, taking year’s rally to 45 percent.

The top five gainers on the Sensex this year are software exporters and drugmakers that get more than half their revenue overseas. The gauge has climbed 4.2 percent this year and is valued at 13.9 times estimated 12-month earnings, compared with the five-year average of 14.1 times. The MSCI Emerging Markets Index is trading at 10.5 times.

Profit of dollar-denominated sectors, including software, healthcare and metals, in the CNX Nifty Index likely grew 19 percent in the September quarter from a year earlier, as a weak rupee boosts the value of their repatriated earnings, Motilal Oswal Securities Ltd. said in a note dated Oct. 1.

HDFC Bank rose 2.6 percent to 649.15 rupees and DLF jumped to 147.45 rupees. The closing prices for both the companies are the highest since Sept. 20.

International investors bought a net $38 million of local stocks on Oct. 8, data from the regulator showed yesterday. That increased this year’s net purchases to $13.8 billion, the second-highest among 10 Asian markets tracked by Bloomberg.

The CNX Nifty Index increased 1.3 percent to 6,007.45. The India VIX, which gauges the cost of protection against losses in the Nifty, lost 2.6 percent.

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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