Indian stocks climbed, with the benchmark index posting its first monthly gain since February, as banks and drugmakers rose before the release of economic growth data.
Sun Pharmaceutical Industries Ltd., the largest drugmaker, advanced for the first time in five days before its earnings on Friday. Mahindra & Mahindra Ltd., a tractor and utility vehicle maker, jumped the most in three weeks after its quarterly sales beat estimates. HDFC Bank Ltd., India’s most valuable lender, was the biggest driver of gains for the S&P BSE Sensex.
The S&P BSE Sensex rose 1.2 percent to 27,828.44 at the close, capping a monthly increase of 3 percent. Slowing factory output and sluggish company earnings growth have increased pressure on Reserve Bank of India Governor Raghuram Rajan to cut interest rates for a third time this year, when he reviews policy on June 2.
“A 25-basis point cut is the consensus view, and any rate cut higher than that will be positive for the market,” Prabhat Awasthi, head of equity research at Nomura Holdings Inc., said in an interview with Bloomberg TV India on Friday. “Growth will come with a lag of six-to-nine months. Once it sets in, it will be a fairly secular story.”
India’s economy probably grew 7.4 percent in the year ended March 31, matching China’s 2014 growth, according to the median estimate of 33 economists in a Bloomberg survey. Gross domestic product is forecast to have expanded 7.3 percent from a year earlier in the three months ended March, slowing from 7.5 percent in the previous quarter.
Twelve of the 27, or 44 percent, of the Sensex companies that have announced March-quarter results so far have exceeded or matched estimates, data compiled by Bloomberg show. In the three months ended December, 47 percent beat or matched, and in the September quarter 67 percent did. That compares with 46 percent in June and 60 percent in March, the data show.
Sun Pharma’s fourth-quarter profit may be unchanged from a year earlier at 15.88 billion rupees ($249 million), according to the median estimate of 22 analysts surveyed by Bloomberg. The stock rose 1.2 percent, halting a four-day, 4.9 percent drop.
Mahindra rose 5 percent after its fourth-quarter sales beat estimates. Its net income of 5.51 billion rupees was lower than the 5.65 billion rupees estimate in a Bloomberg survey. NTPC Ltd. advanced 1.2 percent after its quarterly profit beat estimates.
HDFC Bank rose 2.1 percent, while Axis Bank Ltd. advanced
1.9 percent to its highest close since March 10. The S&P BSE India Bank Index rose 1.5 percent to a six-week high.
International investors sold a net $81 million of Indian stocks on May 27, extending this year’s inflow to $6.76 billion.
The Sensex has increased 1.2 percent this year and is valued at 15.3 times projected 12-month earnings, compared with a five-year average of 14.4. The MSCI Emerging Markets Index trades at a multiple of 12.1.