India’s benchmark stock index rose to a one-month high after a report showed the economy grew more than economist predicted in the last quarter and manufacturing expanded in November for the first time in four months.
ICICI Bank Ltd. rose to a one-month high, pacing a rally among its peers. Bharat Heavy Electricals Ltd. surged to the highest level in four months, sending a gauge of capital goods companies to the highest level since May. Ranbaxy Laboratories Ltd., the nation’s biggest drugmaker, rallied the most in three months. The rupee rose to the highest level in almost two weeks.
The S&P BSE Sensex added 0.5 percent to 20,898.01, the highest close since Nov. 5. Gross domestic product grew 4.8 percent from a year ago, government data showed after market hours on Nov. 29, faster than the 4.6 percent median estimate in a Bloomberg News survey. India’s purchasing managers’ index signaled first manufacturing growth since July, according to a report by HSBC Holdings Plc and Markit Economics today.
“There has been an overall improvement in the economic situation,” Dhirendra Tiwari, head of research with Antique Stocks Broking Ltd., said on Bloomberg TV India. The rally in engineering shares show “early signs of a pick-up in the capital expenditure cycle.”
The purchasing managers’ index last month climbed to 51.3 from 49.6 in October. A reading above 50 signals expansion. The revival is threatened by looming interest-rate increases to fight rising prices. Reserve Bank of India Governor Raghuram Rajan may raise the key interest rate to 8.5 percent next year from 7.75 percent, Goldman Sachs Group Inc. said on Nov. 21, adding to two increases of a combined 50 basis points. The RBI’s next policy meeting is on Dec. 18.
“Manufacturing picked up, led by a rise in new domestic orders, which helped pull-up output growth,” Leif Eskesen, chief economist for India and Southeast Asia at HSBC, said in a statement. “Encouragingly, input and output price inflation eased, which, if sustained, could imply that the RBI is getting closer to the end of its tightening cycle, although it may still need to notch rates up a bit further.”
ICICI Bank increased 1.8 percent to 1,088.30 rupees. Axis Bank Ltd. was the top performer on the S&P BSE India Bankex index, which climbed to its highest level since Nov. 6.
Bharat Heavy added 1.6 percent to 159.65 rupees, its highest close since July 24. Engineering company Larsen & Toubro Ltd. climbed for a seventh day, the longest stretch of gains since March 2011. Yes Bank Ltd. increased 1.9 percent.
Ranbaxy soared 6.5 percent, its highest level since Sept. 13. Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, jumped 4.1 percent, the most since Oct. 9.
The Sensex has climbed 7.6 percent this year, the best performer among the four largest emerging markets, and trades at 13.6 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.7 times.
Overseas investors have purchased a net $17.45 billion of Indian equities this year, the most in Asia after Japan, data compiled by Bloomberg show. They bought a net $1.1 billion of stocks in November, the third monthly inflow, the data show.
The CNX Nifty Index increased 0.7 percent to 6,217.85. The India VIX soared 9.3 percent.