India’s benchmark stock index rose to a two-week high, led by metal producers and automakers, after its best quarterly advance in almost five years.
Hindalco Industries Ltd. climbed to an three-year high after CLSA Asia-Pacific Markets predicted the company’s share price will double in four years. Maruti Suzuki India Ltd. surged 5.9 percent to a record after its June sales expanded 34 percent.
The S&P BSE Sensex rose 0.4 percent to 25,516.35 at the close in Mumbai. The gauge advanced 14 percent in the quarter ended yesterday, the most since the three months through September 2009, as international investors bought Indian stocks on expectations the new government under Prime Minister Narendra Modi will curb Asia’s fastest consumer inflation and boost an economy growing at near the slowest pace in a decade. The government will present its federal budget on July 10.
“Investors are buying cyclicals amid anticipation that the federal budget will propose measures to boost infrastructure and revive growth,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kerala, southern India. “There is still steam left in the rally, and we expect positive momentum to continue as some of the stocks are not too aggressively priced.”
Manufacturing in India grew for an eighth consecutive month in June, according to the HSBC Holdings Plc and Markit Economics purchasing managers index today. The gauge rose to 51.5, the highest level since February, from 51.4 in May. A reading of more than 50 indicates expansion.
The Nifty climbed 0.3 percent to 7,634.70. Hindalco surged 6.7 percent after CLSA raised its rating on the stock to buy, saying the stock will surge on a “multi-year deleveraging cycle.” Tata Steel Ltd. advanced 2.2 percent, while copper producer Sesa Sterlite Ltd. gained 1.4 percent.
Maruti rose for the first time in four days to a record. Mahindra & Mahindra Ltd. jumped 4.1 percent, while Tata Motors Ltd. advanced 4.5 percent, the most since Nov. 14.
Overseas investors bought a net $37.8 million of Indian shares on June 27, extending this year’s inflows to $9.92 billion, the highest after Taiwan among eight Asian markets tracked by Bloomberg.
The Sensex has added 21 percent this year, the best performer among the world’s 10 biggest markets, and trades at 15.6 times projected 12-month profits. The MSCI Emerging Markets Index is valued at 11 times.