Indian Stocks Rise Ahead of Fed Meeting as Software Shares Rally

Indian equities advanced, led by software exporters and consumer companies, before the Federal Reserve begins a policy meeting today.

Tata Consultancy Services Ltd., the nation’s top software services company, gained the most in two weeks. ITC Ltd., which has the highest weighting on the benchmark index, climbed 1.4 percent. Tata Motors Ltd. posted the biggest advance in a week. The rupee had its largest decline in two weeks.

The S&P BSE Sensex added 0.3 percent to 19,804.03 at the close in Mumbai. The gauge changed directions at least 20 times amid volumes that were 37 percent below the 30-day average. The Federal Open Market Committee meets today and tomorrow, when members are forecast to cut monthly bond buying by $10 billion to $75 billion, according to a Bloomberg survey of economists. Reserve Bank of India Governor Raghuram Rajan makes his first monetary policy decision this week after data yesterday showed inflation quickened to a six-month high in August.

“We expect the market to consolidate around these levels before fresh bets are taken based on the outcome of the Fed meeting,” Vaibhav Sanghavi, a director with Ambit Investment Advisors in Mumbai, said by phone today.“The first policy of Governor Rajan will also be keenly watched for its tone.”

Tata Consultancy increased 2.4 percent to 1,947.45 rupees. The stock has risen 55 percent this year, the most among Sensex companies. Wipro Ltd., a software-services company that earned 90 percent of its sales from overseas last quarter, jumped 5.2 percent to 474.95 rupees. Infosys Ltd. rose 1 percent, ending a four-day decline.

The rupee fell 0.8 percent to 63.37 per dollar, extending this year’s loss to 13 percent. A weak currency increases the value of repatriated earnings of exporters.

ITC, Sesa

ITC gained 1.4 percent to 338.7 rupees. Hindustan Unilever Ltd., India’s biggest household products maker, increased 1.4 percent to 628.65 rupees. Tata Motors climbed 1.1 percent to 335.05 rupees. Iron-ore miner Sesa Goa Ltd. added 2.1 percent to 180.55 rupees. Coal India Ltd., the world’s biggest producer of the fuel, advanced 1.4 percent to 293.7 rupees.

Rajan, who took charge Sept. 4, inherited interest-rate increases from July aimed at shoring up the rupee. He’s pledged to contain inflation expectations and stepped up efforts to bolster foreign-exchange reserves, prompting a climb in the rupee that cut its 2013 drop versus the dollar to 13 percent.

The RBI raised two interest rates in July to boost shorter term funding costs and capped cash injections into the banking system. The key repurchase rate was left unchanged after cuts earlier in 2013. Rajan will maintain it at 7.25 percent at the Sept. 20 review, Standard Chartered Plc and Morgan Stanley said.

Asia’s third-largest economy may expand 5.5 percent in the year to March 2014, versus 5 percent in the previous 12-month period, the weakest pace since 2003, according to central bank estimates. The 10-year average is about 8 percent.

Overseas funds bought a net $50.2 million of Indian shares on Sept. 16, data from the regulator show. That extended this year’s net inflow to $12.45 billion, the second-highest among 10 Asian markets tracked by Bloomberg. Foreigners pulled $3.7 billion from domestic stocks in the three months to Aug. 31 as capital fled emerging markets amid prospects of the Fed paring its record stimulus.

The Sensex has risen 1.9 percent this year in local rupee terms and trades for 13.6 times estimated 12-month earnings, compared with the five-year average of 14.1 times, according to data compiled by Bloomberg. It has lost 11 percent this year in dollar terms. The MSCI Emerging Markets Index is valued at 10.6 times, the data show.

The CNX Nifty on the National Stock Exchange of Ltd. rose 0.2 percent to 5,850.20. India VIX, which measures the cost of protection against losses in the Nifty, tumbled 3.1 percent.

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