India's Sensex Advances to Two-Week High Paced by Bank Shares

  • ICICI Bank, Dr Reddy's, SBI among top Sensex performers
  • Parliament passes Bankruptcy Law revamp to clear bad assets

Indian stocks climbed before the release of monthly inflation and industrial output data as optimism grew over the progress of economic bills in parliament.

ICICI Bank Ltd., State Bank of India and HDFC Bank Ltd. rose at least 1 percent. Dr Reddy’s Laboratories Ltd. was the top gainer on the S&P BSE Sensex. Asian Paints Ltd. jumped to a record after its group sales beat analyst estimates Wednesday. Tata Consultancy Services Ltd. added 1.9 percent.

The Sensex index increased 0.8 percent to the highest since April 27. Industrial production may have expanded 2.5 percent from a year earlier in March, compared with a 2 percent gain in February, a Bloomberg survey of economists showed before government data due Thursday. India’s parliament passed a bill on Wednesday to overhaul archaic insolvency laws, taking Prime Minister Narendra Modi a step closer to fulfilling his pledge to make it easier to do business in the world’s fastest-growing major economy. 

“Quarterly earnings are signaling an uptick in industrial demand,” Jitendra Panda, chief executive officer at Peerless Securities Ltd., said by phone from Kolkata. “Bank stocks are up after the bankruptcy legislation was passed by parliament. Investors are finding value in beaten down drugmakers and utilities.”

The bill’s passage gives Modi a political victory after opponents blocked several other pieces of legislation, including a national sales tax. It’s also one of the biggest steps in India’s battle to clean up $117 billion of stressed assets. The inability to shut loss-making companies and collect dues had locked up funds at banks and damped lending and investment.

Consumer prices may have risen 5.05 percent from a year earlier in April, from 4.83 percent in March, a Bloomberg survey showed.

Earnings are also recovering after the worst run since the global financial crisis. Eight of 15 Sensex firms that have posted March-quarter results have beaten or matched estimates. 

Dr Reddy’s reported group net income of 746 million rupees after accounting for a 4.31 billion rupee charge related to its Venezuela operations. That compares with the 5.6 billion rupees estimate of 20 analysts in a Bloomberg News survey.

Foreign investors bought $58 million of local stocks on May 10, taking this year’s inflows to $1.8 billion. They invested $585 million last month after an inflow of $4.1 billion in March, which was the highest in three years.

The Sensex has lost 1.3 percent this year and trades at 15.9 times 12-month projected earnings versus 11.4 for the MSCI Emerging Markets Index.

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