India's Sensex Has Second-Biggest Gain of 2015 on Fed Outlook

Updated on
  • U.S. payrolls, factory data undermine case for 2015 rate hike
  • Tata Motors surges on record U.S. Demand for Land Rover SUVs

India’s benchmark stock index rallied to a six-week high, tracking gains in Asian equities amid speculation disappointing U.S. payrolls data will push the Federal Reserve’s interest-rate increases to next year.

Tata Motors Ltd. was the best performer on the S&P BSE Sensex after the company said the sales of its Range Rover and Evoque SUVs in the U.S. jumped 61 percent last month. Housing Development Finance Corp., the top mortgage lender, rose for the first time in three days. ICICI Bank Ltd., the largest private lender, had the steepest climb in five months. Maruti Suzuki India Ltd. tumbled the most in six weeks after Jefferies cut its rating on the nation’s largest automaker.

The Sensex jumped 2.2 percent to 26,785.55, the biggest advance since Jan. 15 and the highest close since Aug. 21. Eleven of the 30 stocks on the gauge increased more than 3 percent each. The MSCI Asia Pacific Index jumped 1.4 percent, tracking Friday’s surge in the U.S. after payrolls climbed less than projected in September, leading traders to shift bets on the first rate increase since 2006 to March next year. Indian markets were closed on Friday for a holiday.

“There’s a global rally as investors are speculating that the Fed rate hike may not come this year," P. Phani Sekhar, a fund manager at Karvy Stock Broking Ltd., said by phone. “Last week’s rate cut by the RBI is adding to the cheer.” Phani Sekhar said he’s bullish on software exporters, consumer companies, private lenders and drugmakers.

The Sensex gained 1.4 percent last week after the Reserve Bank of India Tuesday reduced borrowing costs by a more-than-expected 50 basis points. The gauge slumped 5.9 percent in the three months ended September, its steepest quarterly loss since 2011, and trades at 15.3 times its projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.

Tata Motors soared 5.8 percent, narrowing this year’s loss to 36 percent. Jaguar Land Rover U.S. sales increased to 6,850 units last month, helping offset declining deliveries in China.

Housing Development Finance rallied 5 percent and ICICI Bank increased 5.2 percent. Larsen & Toubro Ltd., the most valuable engineering firm, gained for a fourth day.

Maruti Suzuki tumbled 3.6 percent, the most since Aug. 24 and the worst performer on the Sensex.

Foreigners bought a net $34 million of domestic stocks on Sept. 30, paring outflows in the July-to-September period to $2.6 billion, the most for any quarter since 2008. The withdrawal reduced this year’s inflows into India to $3.6 billion, still the most among eight Asian markets tracked by Bloomberg.

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