Most Indian stocks rose, led by property companies, after a Reserve Bank of India adviser said the monetary authority will avoid further interest-rate increases if inflation slows.
Godrej Properties Ltd. jumped 9.1 percent as the S&P BSE India Realty Index climbed to a five-month high. Bank of Baroda advanced for a second day. Coal India Ltd., the world’s largest producer of the fuel, added 0.8 percent after Morgan Stanley bought shares. Bharti Airtel Ltd. climbed to a five-week high.
About two stocks rose for each one that fell on the S&P BSE 100 Index at the close in Mumbai. The benchmark S&P BSE Sensex slipped 0.1 percent after advancing 9 percent in 2013. The RBI will avoid increases in the benchmark interest rate if data shows inflation fell in December, and policy makers may even have room for a reduction, Ashima Goyal, a member of the central bank’s technical advisory committee, said by phone yesterday.
“Markets are taking the RBI comments as a signal that interest rates may start trending down soon,” Kishor Ostwal, managing director at CNI Research Ltd., said in a phone interview today from Mumbai. “Anticipation of lower policy rates is helping property stocks and lenders.”
RBI Governor Raghuram Rajan surprised economists last month by holding the benchmark rate at 7.75 percent instead of adding to increases totaling 50 basis points since taking over the central bank in September.
Saudi Arabia’s Tadawul All Share Index gained 0.8 percent after climbing 26 percent in 2013, the measure’s biggest increase in four years. Oman’s MSM 30 Index rose 0.6 percent, while the TA-25 Index in Israel added 0.8 percent. Pakistan’s KSE 100 Index climbed 1.4 percent to a record.
India’s CNX Nifty Index fell less than 0.1 percent to 6,301.65 amid trading volumes 58 percent below the 30-day average, according to data compiled by Bloomberg. The S&P BSE 100 Index added less than 0.1 percent to 6,328.21 and the Sensex was at 21,140.48.
The benchmark gauge posted the biggest increase among equity indexes for the four largest emerging markets in local-currency terms last year as a weak rupee bolstered export earnings, the biggest monsoon rains in six years supported rural incomes and investors speculated national elections will usher in a more stable government in 2014.
Godrej Properties surged the most since 2010. DB Realty Ltd. soared 17 percent, Indiabulls Real Estate Ltd. jumped 5.7 percent while Housing Development & Infrastructure Ltd. gained 3.9 percent. The S&P BSE India Realty Index advanced 2.9 percent to the highest level since July 18.
Bank of Baroda increased 1.8 percent. Yes Bank Ltd. added 1.2 percent. The S&P BSE Bankex Index rose for a second day.
Coal India advanced to 292.20 rupees. Morgan Stanley bought 16.7 million shares of the company, according to the National Stock Exchange of India Ltd.’s website. Bharti Airtel rose 2.3 percent to the highest level since Nov. 21.
A gauge of output from eight key industries increased 1.7 percent in November from a year earlier, versus a drop of 0.6 percent in the previous month, the government said yesterday. India’s budget deficit from April through November was about 5.09 trillion rupees, the Controller General of Accounts said. That compares with a target of about 5.42 trillion rupees in the fiscal year ending March.
“The budget deficit will surely raise some eyebrows and the government will find it very difficult to meet the deficit target,” Paras Bothra, vice president for equity research at Ashika Stock Broking Ltd., said in a phone interview today.
The Sensex will probably climb to 23,200 this year, 9.6 percent higher than yesterday’s close, according to the average of eight analyst predictions compiled by Bloomberg.