India’s Sensex Climbs, Paring Weekly Loss, as Rupee Strengthens

Indian equities advanced, with the benchmark index paring a weekly loss, as the currency jumped by the most in more than a year.

Tata Motors Ltd., owner of Jaguar Land Rover, gained 3.1 percent. HDFC Bank Ltd., the nation’s biggest lender by market value, jumped the most in three weeks. Bharat Heavy Electricals Ltd., the largest power-equipment maker, soared the most since May 2009. Reliance Industries Ltd., operator of the world’s largest refining complex, increased for the second day.

The S&P BSE Sensex surged 1.1 percent to 18,519.44 at the close, with volume 53 percent more than the 30-day average. The gauge surged 2.3 percent yesterday, rebounding from the biggest four-day loss since July 2009. The measure still had its fifth weekly decline amid concern steps to stem a record slide in the rupee may curb economic growth. The currency, which fell to a record 65.56 per dollar yesterday, rallied 2.1 percent.

“The biggest respite today is that the rupee hasn’t weakened,” Gajendra Nagpal, chief executive officer at New Delhi-based Unicon Financial Intermediaries Ltd. said by phone.

Global funds pulled $12.2 billion from Indian shares and bonds since the Federal Reserve Chairman Ben S. Bernanke first flagged a possible cut in stimulus on May 22, leaving the rupee vulnerable to the country’s record current-account deficit.

Tata Motors climbed 3.1 percent to 300.95 rupees. Mahindra & Mahindra Ltd., the nation’s largest tractor maker, increased 2.6 percent to 813.8 rupees. HDFC Bank climbed 3.2 percent to 607.55 rupees, the most since Aug. 1. ICICI Bank Ltd. rose 2.6 percent to 853.05 rupees, helping the 13-member S&P BSE Bankex add 1.9 percent.

Excessive Pessimism

Bharat Heavy rallied 8.1 percent to 116.1 rupees, paring this year’s loss to 49 percent. The stock touched an eight-year low on Aug. 20. BEML Ltd., a producer of earthmoving equipment, soared 12 percent to 147.05 rupees, the most since Sept. 17. Reliance Industries climbed 1.7 percent to 819.5 rupees.

Finance Minister Palaniappan Chidambaram and Reserve Bank of India Governor Duvvuri Subbarao held coordinated briefings in New Delhi yesterday to try to soothe investors’ nerves. Excessive pessimism is unwarranted, economic growth will pick up as the year progresses and the currency’s drop has overshot appropriate levels, Chidambaram said.

The rupee closed at 63.33, posting the biggest gain since June 2012.

Asia’s third-largest economy may expand 5.5 percent in the year to March 2014, according to RBI estimates. That compares with the 10-year average of about 8 percent. Data due Aug. 30 may show the economy expanded 4.6 percent in the quarter ended June, slower than 4.8 percent in the previous period, according to the median estimate of 21 economists surveyed by Bloomberg.

‘More Pain’

Combined profits for the 30 companies in the Sensex rose 1.4 percent in the three months ended June, compared with an estimate of 5.8 percent before the reporting season, Bank of America Corp. said in a report dated Aug. 19. India follows April-to-March financial year.

“There’s more pain to come and that will be reflected in the second-quarter company earnings,” Jigar Shah, senior vice-president and head of research at Kim Eng Securities India Pvt., said in an interview on Bloomberg TV India.

About 47 percent of Sensex companies that posted earnings for the June quarter missed analyst estimates. That compares with 27 percent for the March quarter, and 43 percent in the three months ended December, data compiled by Bloomberg show.

The Sensex has lost 4.7 percent this year and trades at 13.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.9 times.

The CNX Nifty index on the National Stock Exchange added 1.2 percent to 5,471.75. India VIX, which measures the cost of protection against losses in the Nifty, slumped 11 percent, ending a five-day 55 percent rally.

International investors sold a net $118 million of local shares on Aug. 21, data from the regulator show. That reduced this year’s inflow to $12.1 billion, the data show.

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