Fed Outlook Boosts Sensex for Fifth Day as Reliance Rallies

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Indian stocks climbed for a fifth day after the Federal Reserve said its monetary-policy tightening will be gradual, easing concerns that fund flows to emerging markets will taper.

Reliance Industries Ltd., owner of the world’s largest refining complex, jumped the most in three months, while Oil & Natural Gas Corp. rose a fourth day. Bharat Heavy Electricals Ltd., the top power-equipment maker, climbed for the first time this week and HDFC Bank Ltd. paced gains among lenders.

The S&P BSE Sensex jumped 1.1 percent to 27,115.83 at the close. The gauge is having its longest rising streak in two months as rains that were 11 percent above normal since June 1 have spurred optimism that dry weather won’t spike food costs and curb the central bank’s ability to cut interest rates. Asian stocks rose after Fed Chair Janet Yellen said she still wants to see more evidence of a lasting turnaround before raising near-zero interest rates that have boosted demand for riskier assets.

“The Fed’s statement and the progress of the monsoon led to the cheer in the market,” R.K. Gupta, New Delhi-based managing director of Taurus Asset Management Co., said by phone. “The concern on emerging-market flows have eased” after the Fed’s outlook on interest rates, he said.

Conditions are favorable for the monsoon to advance in the next two-to-three days, the weather bureau said Thursday. Normal rainfall is critical for Prime Minister Narendra Modi’s plan to accelerate growth in a country where smartphone makers to gold jewelry retailers derive the bulk of their sales from 833 million people living in villages, most of whom depend on farming. Rains in the June-September season water more than half of the nation’s farmland, where sowing begins in June.

Refining Profits

Reliance jumped 5.1 percent, the best performance on the Sensex. The stock has surged 10 percent this week, poised for the biggest weekly advance since September 2011.

The rally came amid an improvement in the price of refined fuels versus crude oil. Singapore gross refining margins have averaged about $8 per barrel since April 1, compared with $5.8 a barrel in the first quarter, according to Jefferies India. Reliance’s billionaire Chairman Mukesh Ambani said this month the company will begin commercial operations of its $16-billion Jio phone service around December.

Bharat Heavy Electricals added 1 percent. HDFC Bank surged 1.5 percent.

International investors sold a net $76.5 million of Indian stocks on Tuesday, June 16, paring this year’s inflow to $6.5 billion.

The Sensex has dropped 1.4 percent this year and trades at 15.1 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.9.

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