Most India Stocks Rise as Foreigners Boost Holdings, Rupee Gains

Most Indian equities climbed after foreigners boosted holdings of local shares by the most since May as the rupee had its best run in almost a year.

State Bank of India rose to a one-month high, sending a gauge of 13 lenders to a six-week high. Tata Steel Ltd. gained for a third day, helping a measure of 10 metalmakers to close at a three-month high. The rupee capped a fifth day of advance, rising 0.8 percent, the longest streak since October.

About three stocks climbed for every two that fell in the S&P BSE Sensex, which closed unchanged at 19,997.45 even as the measure’s 30-day volatility climbed to a four-year high. Global funds bought a net $421 million of shares on Sept. 10, a fourth day of inflow that fueled the biggest rally in the Sensex in four years yesterday. The currency has rebounded 6.9 percent in the past five days, the most in at least four decades, as new Reserve Bank of India Governor Raghuram Rajan announced steps on Sept. 4 to boost the supply of dollars.

“Strong buying by foreign funds shows that the undertone is still bullish,” A.K. Prabhakar, senior vice president of equity research at Anand Rathi Financial Services Ltd., said by phone from Mumbai today.

State Bank increased 3.5 percent to 1,690.05 rupees, the highest close since Aug. 7. HDFC Bank Ltd. rose 1.5 percent to 647.25 rupees, the highest price since July 25. Smaller rivals - - Bank of India, Bank of Baroda and Canara Bank -- were among the best performers on the MSCI Emerging Markets Index today.

The S&P BSE Bankex closed at its highest level since July 29. The index has surged 19.5 percent in five days, the biggest advance since May 2009, amid speculation the central bank may reverse cash-tightening steps taken in July to stem the slide in the rupee, according to Anand Rathi’s Prabhakar. The moves aided a three-month surge in government bond yields.

Metals Rally

Tata Steel jumped 5 percent to 315.7 rupees, the highest close since May 28. Aluminum producer Hindalco Industries Ltd. rallied 3.9 percent to 114.5 rupees, a seven-month high. Jindal Steel & Power Ltd. rose 1.8 percent to 241.2 rupees. The S&P BSE India Metal Index closed at its highest level since May 30.

Hindustan Unilever Ltd. lost 1.5 percent, sending a gauge of 11 consumer-goods makers to its first drop in five days.

The rupee rose to 63.3650 per dollar, erasing an intraday loss of 0.6 percent. It fell to a record low of 68.845 on Aug. 28. Brent oil fell the most since June 20 yesterday as the U.S. Senate backed away from a vote authorizing a military strike against Syria.

S&P Threat

Falling crude costs and a strengthening currency reduces pressure on the nation’s public finances. Standard & Poor’s reiterated last week it may cut India’s BBB- credit rating to junk because of the government’s failure to tackle its fiscal and current-account deficits. Foreign funds pulled $3.7 billion from local shares in the three months to August, the most since the global financial crisis in 2008, fueling the rupee’s slide and worsening the current-account shortfall.

Global funds have still purchased a net $12.2 billion of domestic shares this year, the second-highest among 10 Asian markets tracked by Bloomberg.

The Sensex has increased 2.9 percent this year in local currency terms and is valued at 14.2 times projected 12-month earnings. It has lost 11 percent this year in dollar terms. The MSCI Emerging Markets Index is valued at 10.6 times.

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