Indian Stocks Rally Most in a Month After Rupee Support Measures

Indian stocks gained the most in a month after the government announced additional measures to trim the current-account deficit and support the nation’s currency. The rupee strengthened.

ICICI Bank Ltd., the nation’s biggest private lender, rose the most since June 28, while HDFC Bank Ltd. jumped 3 percent, the largest advance in two weeks. Infosys Ltd., India’s second-biggest software services company, climbed to a two-year high, while Wipro Ltd. jumped to a 13-year high.

The S&P BSE Sensex rallied 1.5 percent to 19,229.84, the biggest gain since July 11. The government increased import duties on gold and platinum to 10 percent from 8 percent and boosted the levy on silver to 10 percent from 6 percent, the Ministry of Finance said today. The rupee reversed an earlier loss and rose as much as 0.5 percent to touch 60.97 a dollar. The currency sank to a record low of 61.805 on Aug. 6.

“The rally was led by banking shares as they were oversold,” Kaushik Dani, a fund manager at Peerless Mutual Fund, which has about $745 million in assets, said by phone from Mumbai. “The measures taken by the government, plus the other policies lined up to stem the fall in the rupee seem to be bearing fruit.”

Consumer Prices

Finance Minister Palaniappan Chidambaram said yesterday the government will also ease rules for overseas commercial borrowings and certain deposit programs for non-residents to spur capital inflows. India has implemented a series of measures in the past month to bolster its currency amid concerns the 10 percent slump against the dollar this year may fuel inflation.

Consumer prices rose 9.64 percent in July from a year earlier, compared with 9.87 percent in June, according to data released after the market closed yesterday. The median forecast in a Bloomberg survey of analysts was for a 9.71 percent increase.

Industrial output shrank 2.2 percent in June, compared with an estimated 1.1 percent decline, data showed yesterday.

HDFC Bank surged 3 percent to 620.50 rupees. ICICI Bank rose 2.9 percent to 892.55 rupees. Mortgage lender Housing Development Finance Corp. added 2.9 percent to 791.95 rupees.

Global Data

“Bank stocks rallied amid speculation a rebound in the rupee will provide RBI room to resume monetary easing,” said D.K. Aggarwal, New Delhi-based chairman and managing director of SMC Investments & Advisors Ltd., which manages $100 million of Indian shares, including those of lenders. “Technology stocks are getting support from positive economic data from around the world.”

Data this week may bolster the global economic outlook. U.S. retail sales probably climbed a fourth month in July, while industrial output in the euro region rose the most in June since 2011, according to surveys of economists by Bloomberg before data due today.

Infosys increased 2.6 percent to 3,083.60 rupees, the highest level since April 2011. Wipro jumped 2.8 percent to

467.6 rupees, the highest close since April 2000.

Mahindra & Mahindra Ltd., India’s largest maker of tractors and sport-utility vehicles, advanced 1.5 percent to 873.75 rupees. The company reported today that net income excluding units increased to 9.38 billion rupees ($153 million) in the three months ended June 30, surpassing the 8.5 billion-rupee median of 39 analyst estimates compiled by Bloomberg. The stock rose as much as 4.3 percent before the announcement.

Shares of Hindalco Industries Ltd. fell 2.8 percent, paring a decline of as much as 4.6 percent, after the nation’s second-largest aluminum producer reported a better-than-expected 12 percent increase in first-quarter profit, aided by a falling rupee and lower raw-material costs.

Tata Steel

Tata Steel Ltd., India’s biggest producer, rose 2.1 percent to 241.40 rupees. The steelmaker may say today that net income dropped to 12.5 billion rupees from 13.6 billion rupees in the first quarter last year, according to 10 analysts surveyed by Bloomberg.

About 44 percent of Sensex companies that have reported earnings so far for the June quarter missed analyst forecasts. That compares with 27 percent for the three months ended March and 43 percent in the quarter through December, data compiled by Bloomberg show.

The Sensex has lost 1 percent this year and trades at 13.5 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.2 times.

International investors sold a net $55 million of Indian shares on Aug. 8, a second day of outflows, data from the regulator show. That pared this year’s inflow to $12.5 billion, the second-biggest among 10 Asian markets tracked by Bloomberg.