India Stocks Climb as Industrials Advance on Factory Output Data

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Indian stocks climbed, with the benchmark index rising to a five-week high, as industrials rallied after data showed factory production in February rose at the fastest pace in three months.

Bharat Heavy Electricals Ltd., the biggest power-equipment maker, gained the most in two weeks, and Larsen & Toubro Ltd., the largest engineering company, climbed for the first time in three days. Bharti Airtel Ltd. rose to a four-year high, while Reliance Industries Ltd. capped the steepest five-day advance since September 2011.

The S&P BSE Sensex increased 0.5 percent to 29,033.80 at the close. The gauge rose 2.2 percent last week after India’s credit rating outlook was raised to positive by Moody’s Investors Service, signaling confidence in efforts by policy makers to boost economic growth. Industrial production rose 5 percent from a year earlier in February, official data showed after trading ended on Friday. That exceeded the 3.3 increase estimated by 33 analysts in a Bloomberg survey.

“We’ve got a confluence of positive macro indicators, right from lower commodity prices and lower inflation to the overall makeover” in public finances, Taher Badshah, co-head of equities at Mumbai-based Motilal Oswal Asset Management Co., which has about $230 million in assets, said in an interview with Bloomberg TV India today. “There’s optimism that these factors will lead to growth getting better.”

Bharat Heavy jumped 3.4 percent, while Larsen advanced 2.2 percent. Bharti Airtel added 3.3 percent to its highest level since August 2011.

Mid-Caps Rally

Reliance gained 2 percent, taking the five-day gain to 12 percent. Sun Pharmaceutical Industries Ltd., the nation’s most valuable drugmaker, increased 2.8 percent. The stock has risen 39 percent this year, the best performance on the Sensex.

The S&P BSE Mid-Cap Index added 0.3 percent to a record, while a gauge of 483 small-sized companies climbed 0.8 percent to the highest level since January 2008.

The Sensex traded little changed in the first few hours of trading before the release of March retail inflation data later today. Consumer prices probably rose 5.44 percent from a year earlier, according to the median of 34 analyst estimates in a Bloomberg survey, compared with 5.37 percent in February.

Reserve Bank of India Governor Raghuram Rajan kept rates on hold last week as he waits for banks to pass on the central bank’s interest-rate cuts in January and March to borrowers.

The Sensex has risen 5.6 percent this year and is valued at 16.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 12.5. Foreigners have bought $6.2 billion of shares this year, the highest inflow in Asia, adding to $16 billion of purchases in 2014.

The market is closed tomorrow for a public holiday.

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