India’s Sensex Climbs Most in Two Weeks; Reliance, Bharti Lead

Indian stocks advanced the most since May 15 after last week’s drop in the benchmark index lured investors. Reliance Industries Ltd. led the gains.

The S&P BSE Sensex rose 1.7 percent to 20,030.77 at the close in Mumbai. Reliance, the owner of the world’s largest refining complex and the second-biggest stock in the gauge by weighting, jumped the most in eight months after discovering a new natural gas field in its biggest block off India’s eastern coast. Bharti Airtel Ltd., the nation’s largest mobile-phone operator, soared 3.6 percent.

The Sensex dropped 2.9 percent last week amid speculation global central banks may taper stimulus. The decline dragged the gauge’s valuation to 13.53 times projected 12-month profits on May 24, a three-week low. The Sensex rallied to more than a two-year high May 17 amid monetary easing by policy makers from India to Europe, and a slide in oil and gold costs that lowered concern on the nation’s record current-account deficit.

“Valuations are looking better after last week’s fall,” Gajendra Nagpal, chief executive officer at Unicon Financial Intermediaries, said by phone from New Delhi. “Increasingly investors are convinced that a softness in commodity prices will set in a virtuous cycle of lower inflation and interest rates, and higher corporate profits.”

Reliance Industries rallied 5.3 percent to 828.3 rupees, its steepest climb since Sept. 14. Reliance, with partners BP Plc and Canada’s Niko Resources Ltd., announced on May 24 a “significant” discovery of gas in a deposit that lies under the biggest producing areas in the KG-D6 block in the Bay of Bengal. The find may help billionaire Mukesh Ambani-controlled Reliance reverse a three-year decline in production from the block and boost earnings that have dropped in four of the last six quarters.

Reliance Upgrade

“This discovery opens up a new liquid-rich gas condensate play offshore India,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a report today, while upgrading Reliance to ‘outperform’ from ‘market perform’.

Bharti Airtel surged 3.6 percent to 309.15 rupees. Housing Development Finance Corp., the biggest mortgage lender, added 2.6 percent to 929.5 rupees. Sun Pharmaceutical Industries Ltd., India’s most valuable drugmaker, increased 4.6 percent to 1,013.7 rupees, a record.

Coal India Ltd. climbed for the fifth day, adding 1.2 percent to 313.8 rupees. The world’s biggest producer of the fuel said after market hours its fourth-quarter profit climbed 35 percent to 54.1 billion rupees, beating analysts’ estimates.

Earnings Scorecard

Profit at four of the 22 Sensex companies that have posted March-quarter results so far has trailed analysts’ estimates, data compiled by Bloomberg show. The scorecard excludes Tata Steel Ltd., which posted a loss. Net income at about 43 percent of the 30 index companies missed forecasts in the three months ended December, compared with 40 percent in the previous two quarters.

Britannia Industries Ltd., a biscuit maker which is not part of the Sensex, jumped 16 percent to a record 665.65 rupees after fourth-quarter profit surged 66 percent. Drugmaker Wockhardt Ltd. gained 3.6 percent, ending a six-day 33 percent plunge, after reporting fourth-quarter profit of 3.35 billion rupees compared with a loss of 1.92 billion rupees a year ago.

“This earnings season has been much better than expected and that will support the rally,” said Unicon’s Nagpal

Monetary easing by global central banks has stoked inflows into emerging markets including India, with foreigners having bought a net $14.5 billion of local shares in 2013, data compiled by Bloomberg show. Flows have accelerated since the Reserve Bank of India lowered interest rates on May 3.

The Sensex, which has risen 3.1 percent in 2013, trades at 13.8 times projected 12-month profits. Volume on the gauge was 32 percent lower than the 30-day average. The 50-stock CNX Nifty Index on the National Stock Exchange of India Ltd. added 1.7 percent to 6,083.15. Its May futures settled at 6,083.45.

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