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Indian Stocks Climb to 3-Week High as Infosys Raises Forecast

Oct. 11 (Bloomberg) -- India’s benchmark stock index rose for the sixth week in seven, led by technology shares, after Infosys Ltd. raised its annual sales forecast.

Infosys jumped to its highest level in 30 months, helping a gauge of software makers to its biggest gain in three months. Tata Consultancy Services Ltd., HCL Technologies Ltd. and Tata Motors Ltd. climbed to a record. ICICI Bank Ltd. rallied 5.2 percent. DLF Ltd. led other developers higher after the market regulator allowed setting up of real-estate investment trusts. The rupee strengthened to a two-month high.

Infosys, kicking off the earnings season for the quarter ended September, said its dollar revenue will rise 9 percent to 10 percent in the year ending March amid economic recovery in the U.S. and Europe. The nation’s second-largest software maker in July projected growth of 6 percent to 10 percent. The S&P BSE Sensex added 1.3 percent to 20,528.59, a three-week high. The 30-stock gauge rallied 3.1 percent this week.

“Infosys raising its guidance shows demand is strong in developed nations and that bodes well for software exporters for the next two quarters at least,” P. Phani Sekhar, a fund manager at Angel Broking Ltd. in Mumbai, said by telephone.

Infosys, which has the second-highest weighting in the Sensex, surged 4.7 percent to 3,274.50 rupees, its highest close since April 2011. Tata Consultancy added 2 percent and HCL Technologies increased 3.6 percent.

Second-quarter net income at Infosys rose 1.6 percent to 24.1 billion rupees ($393 million), lagging behind the 26.6 billion-rupee median of 46 analysts’ estimates in a Bloomberg survey. Sales rose to 129.7 billion rupees, beating the 127.3 billion-rupee median of estimates.

Worst Performer

The company, which got 64 percent of its revenue from North America in the year ended March, benefits from a slide in the Indian currency. The rupee was the worst performer after the Indonesian rupiah and Argentinian peso among 24 emerging-market currencies tracked by Bloomberg in the September quarter. The rupee rose 0.5 percent to 61.08.

Profits in dollar-denominated sectors, including software, health care and metals, likely grew 19 percent in the quarter from a year earlier because of a weak rupee, Motilal Oswal Securities Ltd. wrote in a note dated Oct. 1. About 47 percent of Sensex companies missed analysts’ profit forecasts in the June quarter, compared with 27 percent three months earlier.

Tata Motors surged 3.7 percent to 385.30 rupees. ICICI Bank gained the most in three weeks to 997.05 rupees.

Developers Advance

DLF gained 3.5 percent, taking this week’s rally to 11 percent, the most in a month. Unitech Ltd. soared 7.5 percent, while Prestige Estates Projects Ltd. climbed 3.1 percent. The S&P BSE India Realty rose to its highest level since Sept. 19.

The Securities and Exchange Board of India is considering allowing developers to introduce real-estate investment trusts, or REITs, that can raise money through initial share sales, the regulator said in draft guidelines on its website yesterday.

Stocks also advanced after U.S. lawmakers moved toward an agreement to lift the government debt ceiling. Talks between President Barack Obama and Republican lawmakers will continue as they try to seek a “path forward,” according to Republican House Majority Leader Eric Cantor.

“The market has been rising as the possibility of a U.S. default is minimal,” Angel’s Sekhar said.

India’s economic growth will accelerate from the previous quarter as exports strengthen, agricultural output improves and the nation tackles challenges such as poor infrastructure and a “distorted” regulatory regime, Reserve Bank of India Governor Raghuram Rajan said in a speech in Washington yesterday.

Growth Outlook

While inflation remains high, Rajan said, India may be past the slowdown in growth, which cooled to 4.4 percent last quarter from a year earlier, the least since the three months ended March 2009.

The Sensex has risen 5.7 percent this year and is valued at 14.1 times estimated 12-month profits, compared with 10.7 times for the MSCI Emerging Markets Index.

The CNX Nifty Index increased 1.3 percent to 6,096.20. The India VIX, which gauges the cost of protection against losses in the Nifty, plunged 8.9 percent.

Global investors bought a net $123 million of domestic stocks yesterday, taking this year’s inflows to $14 billion, data from the regulator 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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