India’s Sensex Has Second Weekly Advance, Holds at Two-Year High

Indian stocks advanced for a second week, helping the benchmark index close at a two-year high. Software exporters and energy companies gained the most today.

The BSE India Sensitive Index, or Sensex, rose 0.1 percent to 19,784.08 in Mumbai, holding at its highest level since Jan. 6, 2011. Volumes on the gauge were 1.7 percent lower than the 30-day average at the close. Oil and Natural Gas Corp. and GAIL India Ltd. gained after a report the government may deregulate fuel prices. Tata Consultancy Services, the largest software maker, jumped 1.5 percent, leading its peers higher, after the rupee weakened for a second day.

The Sensex advanced 1.7 percent this week, extending last year’s 26 percent gain that was the biggest annual jump since 2009. Offshore investors plowed a net $24.5 billion into local stocks in 2012, the highest among 10 Asian markets tracked by Bloomberg, excluding China, amid government measures to bolster an economy growing at the slowest pace in three years.

“Indian equities are on a firm footing and the positive trend is likely to continue as inflows remain strong,” Kaushik Dani, a fund manager at Peerless Mutual Fund, which has $874 million in assets, said by telephone from Mumbai. “There is a sense of optimism that economic growth will recover.”

A private survey showed today India’s service industries grew at a faster pace in December after the government stepped up efforts to revive growth. The purchasing managers’ index climbed to 55.6 from 52.1 in November, HSBC Holdings Plc and Markit Economics said in a statement.

Foreign Investment

Prime Minister Manmohan Singh curbed fuel subsidies in September and opened industries including retailing to more foreign investment, seeking to steady the currency and avert a credit-rating downgrade that may disrupt capital flows. Foreign funds bought a net $265 million of stocks on Jan. 3, data from the market regulator show.

The measures made the Sensex the best performer among the so-called BRIC nations last year. The measure trades at 15.6 times estimated earnings, the highest since March, compared with the MSCI Emerging Markets Index’s multiple of 11, data compiled by Bloomberg show.

The BSE Oil & Gas Index jumped 1.1 percent today, the most among 13 sectoral indices maintained by the BSE Ltd., Asia’s oldest bourse. Oil & Natural Gas increased for the third day, gaining 1.8 percent to 284.80 rupees, its highest close in three months. Gail India, the biggest natural-gas distributor, climbed 2.2 percent to 371.15 rupees, the most on the Sensex.

India may allow a staggered increase in prices of diesel and other fuels before completely ending price controls in the next 15 months, the Economic Times newspaper reported today.

Repatriated Earnings

A gauge of technology stocks advanced 1 percent, led by software makers, after the rupee lost 1.1 percent to 55.0750 per dollar in Mumbai, the most since Nov. 5. A weaker local currency benefits exporters because it increases the value of repatriated earnings.

Tata Consultancy jumped 1.5 percent to 1,299.2 rupees, a one-month high. Wipro Ltd., the third-largest software maker, added 1.5 percent to 403.65 rupees, the highest close since June 6. Infosys Ltd., the second-largest, rose 0.5 percent to 2,349.55 rupees.

A measure of material producers ended a five-day rally as industrial metals fell after the U.S. Federal Reserve said it will probably end its bond-purchase program sometime this year. Sterlite Industries (India) Ltd., the largest copper producer, slid 1.8 percent to 120 rupees. Copper fell by the most in two weeks in London as industrial metals dropped after the U.S. Federal reserve signaled a halt to bond purchases aimed at spurring growth in the world’s second-biggest consumer of the metal. Aluminum, zinc, lead and nickel fell.

Jindal Steel & Power Ltd. dropped 1.8 percent to 457.80 rupees and aluminum maker Hindalco Industries Ltd. lost 1.4 percent to 132.55 rupees.

The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. added 0.1 percent to 6,016.15, a two-year high. Its January futures traded at 6,048. The BSE Mid-Cap Index added 0.3 percent, a sixth day of gains. India VIX, which measures the cost of protection against losses in the Nifty, slid 0.7 percent to 13.37.

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