India Stocks Climb in Last Hour as Bearish Bets Drop Before Fed

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Indian stocks climbed for a third day, with the benchmark gauge erasing losses in the final hour of trade, amid speculation the Federal Reserve may not immediately raise interest rates.

Tata Power Ltd., the biggest non-state generator, was the top performer on the S&P BSE Sensex. Bajaj Auto Ltd. and Hero MotoCorp Ltd., the top two-wheeler makers, climbed at least 1.5 percent and Mahindra & Mahindra Ltd., a tractor maker, rose for a third day. Hindustan Unilever Ltd., the largest home-products producer, increased the most in two weeks.

The S&P BSE Sensex gained 0.4 percent to 26,686.51 at the close. The gauge dropped 0.8 percent intraday amid a selloff in global stocks as Greece struggled to resolve a debt crisis. The Federal Reserve starts a two-day meeting Tuesday as investors look for signals on the timing of an increase in U.S. borrowing costs. Higher rates damp the allure of emerging-market assets.

“Traders cut overnight bearish bets and added to long positions going into the Fed meeting on the belief that there may not be an immediate increase” in rates, Deven Choksey, managing director of K.R. Choksey Shares & Securities Ltd., said by phone from Mumbai.

While U.S. data from hiring to spending has supported the case for tighter monetary policy, there’s almost no chance the Fed will increase its rate target, which has been left at zero to 0.25 percent since 2008, according to a Bloomberg survey of economists.

Tata Power surged 2.9 percent to its highest level since June 2. Bajaj Auto increased 2.5 percent, taking its three-day gain to 8 percent. Hero MotoCorp added 1.5 percent. Mahindra climbed 1 percent, while Hindustan Unilever added 1.6 percent.

BPCL Share Sale

Bharat Petroleum Corp. slid to a three-week low after the finance ministry is said to have proposed selling a stake in the state refiner. The stock dropped 1.6 percent.

Reliance Communications Ltd. lost O.3 percent as billionaire Anil Ambani is in exclusive talks to buy AFK Sistema’s Indian wireless unit. The discussions between Reliance Communications and Sistema Shyam TeleServices Ltd. are non-binding and there’s no certainty a deal will result, Sistema, said in an exchange filing Monday.

International investors sold a net $91 million of Indian stocks on June 15, paring this year’s inflow to $6.66 billion. The CNX Nifty Index rose 0.4 percent to 8,047.30.

The Sensex has decreased 3 percent this year, the worst performer among major Asian benchmarks after Indonesia’s gauge. The Sensex trades at 14.8 times projected 12-month earnings, versus the MSCI Emerging Markets Index’s multiple of 11.7.

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