Indian stocks climbed to a record as wholesale-price inflation unexpectedly eased in April and investors awaited the results of national elections tomorrow.
Tata Steel Ltd. climbed to a two-year high after reporting profit that beat estimates. Sun Pharmaceutical Industries Ltd. gained the most in two weeks after Novartis AG settled a suit with U.S. unit of the Indian drugmaker. The rupee strengthened to more than a nine-month high. India VIX, a gauge of the cost to protect against swings in the nation’s stock market, surged 13 percent, the most since March 31.
The S&P BSE Sensex added 0.4 percent to 23,905.60 at the close, after changing direction at least 15 times. The measure has beaten stock indexes in Brazil, Russia and China in 2014 as investors bet a Bharatiya Janata Party-led government will revive an economy growing at near a decade-low pace. Foreigners have bought a net $6.6 billion of domestic shares in 2014, the highest in Asia, data compiled by Bloomberg show.
The market has “already factored in a majority” for the BJP-led alliance, Sanjeev Prasad, co-head and senior executive director at Kotak Institutional Equities, said in an interview to Bloomberg TV India today. The Sensex may climb by as much as 5 percent if the BJP gets a majority, making it less reliant on the support of regional parties, he said.
The National Democratic Alliance, led by the BJP, is set to win 279 of the 543 parliamentary seats, according to an exit poll released yesterday by NDTV television channel and Hansa Research. Six surveys on May 12 showed the alliance winning 249 to 340 seats, with 272 needed for majority.
Tata Steel, NTPC
The Sensex is up 21 percent since Sept. 13, when the BJP named Narendra Modi as its candidate for prime minister, while the rupee has advanced 7.2 percent. The rally may extend if the alliance gets more than 266 seats, according to a Bloomberg survey of 19 brokers and investment advisory firms.
Tata Steel gained 1.8 percent to 460.60 rupees, extending this year’s gain to 8.6 percent. The company reported profit of 10.4 billion rupees ($175 million) for the March quarter after markets closed yesterday. That compares with the median 9.13 billion-rupee estimate of 23 analysts in a Bloomberg survey.
NTPC Ltd. surged 3 percent to 129.30 rupees, a fifth day of advance. India’s biggest power producer said after market hours that its fourth quarter profit dropped 29 percent to 30.9 billion rupees, less steeply than analysts had estimated.
Motorcycle maker Bajaj Auto Ltd. tumbled 4.5 percent to 1,950.50 rupees, its biggest drop since Aug. 19. The company reported net income of 7.64 billion rupees, missing the 8.04 billion rupees estimated by 37 analysts in a Bloomberg survey.
Twelve of 15 Sensex companies that have posted earnings so far have beaten or matched estimates.
Sun Pharmaceutical gained 1.5 percent, the steepest since April 28. Tata Power Co. jumped 3.4 percent, the most on the Sensex. Oil & Natural Gas Corp. added 2.8 percent, taking this month’s rally to 16 percent.
The Sensex is valued at 14.8 times estimated 12-month profits, data compiled by Bloomberg show. The MSCI Emerging Markets Index trades at 10.7 times. The local gauge traded at 21 times in October 2007 at the peak of the previous bull run before collapsing amid the global financial crisis.
“We have comfort of valuation while the indices may be at an all-time high,” Prateek Agrawal, chief investment officer at ASK Investment Managers Pvt., told Bloomberg TV India today. “With new set of people governing the country, growth may turn out to be higher or similar to the long-term average.”
India’s wholesale inflation unexpectedly eased in April, giving the central bank room to keep rates unchanged in the coming months. The wholesale-price index rose 5.2 percent from a year earlier, versus 5.7 percent in March. The median of 39 estimates in a Bloomberg survey had been 5.7 percent.
Reserve Bank of India Governor Raghuram Rajan kept the benchmark repurchase rate at 8 percent last month after raising it from 7.25 percent in September, and said further tightening isn’t anticipated if consumer-price gains stay on path to hit 8 percent in January 2015 and 6 percent a year later.
Consumer price inflation accelerated 8.59 percent in April from a year earlier, official data showed May 12.
Overseas funds bought a net $610 million of shares over two days on May 13 and 14, data from the regulator show.