India’s Sensex Climbs to Two-Week High as L&T, Dr. Reddy’s Rally

Updated on

India’s benchmark stock index rose to a two-week high as industrials and technology companies gained after global funds extended their monthly purchases of shares.

Larsen & Toubro Ltd., the most-valuable engineering company, rallied the most in six weeks. Tata Consultancy Services Ltd., the largest software services exporter, advanced for a second day. Dr. Reddy’s Laboratories Ltd., a drugmaker, increased to a record. Nestle India Ltd. slipped the most in two months after the country’s food regulator clarified it hadn’t lifted the ban on the sale of Maggi noodles.

The S&P BSE Sensex added 0.3 percent to 28,298.13 at the close Thursday, after changing direction six times. Global funds have bought a net $120 million of Indian stocks this week even as six of eight Asian markets tracked by Bloomberg witnessed outflows, data compiled by Bloomberg show. They plowed $882 billion into local shares in July, the first monthly inflow since April.

“Fund flows have been good, and that is providing support to the market,” Alex Mathews, the head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kollam in the southern state of Kerala. “Corporate results have been in line with expectations, and economic data is showing macros are getting better.” Mathews is advising investors to buy shares of technology companies and drugmakers.

Tat Motors, Lupin Climb

Fourteen of 20 Sensex companies, or 70 percent, that have announced results for the June quarter have matched or exceeded estimates, versus 40 percent in March. The Nikkei India July Services Purchasing Managers Index climbed to 50.8 from 47.7 a month earlier. A reading above 50 signals expansion.

Larsen jumped 2.9 percent, the most since June 25. Tata Motors Ltd., owner of Jaguar Land Rover, added 1.8 percent, the most since July 23. Bharat Heavy Electricals Ltd., India’s biggest power-equipment maker, increased 0.7 percent, while Mahindra & Mahindra Ltd. added 0.8 percent.

Dr. Reddy’s rose 1.8 percent to an all-time high. Lupin Ltd. gained 1.5 percent and Cipla Ltd. advanced 0.7 percent. Infosys Ltd., the second-largest software exporter, added 0.6 percent.

Nestle sank 5.2 percent. The stock had rallied 7.7 percent on Wednesday after a government-approved laboratory found samples of Maggi noodles to be safe, sparking speculation that the ban on the popular product may be lifted soon.

Overseas investors bought a net $52 million of stocks on Aug. 4, taking this year’s inflows to $7.2 billion.

The Sensex trades at 15.8 times projected 12-month profits, compared with a multiple of 11.2 for the MSCI Emerging Markets Index.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE