India’s Sensex Has Best Month Since 2012, Closes at Record High

Indian equities climbed, with the benchmark index posting its biggest monthly gain since January 2012, amid optimism better-than-estimated company earnings will accelerate capital inflows.

Mobile-phone operator Bharti Airtel Ltd. rose for a second day after posting better-than-estimated sales. Bank of India soared the most in six years, sending a gauge of lenders to a three-month high, after its profit beat estimates. Copper maker Sesa Sterlite Ltd. advanced before its earnings.

The S&P BSE Sensex rose 0.6 percent to a record 21,164.52, taking this month’s gain to 9.2 percent. Bulk of the gain came in the final half-hour of the session as futures positions were rolled over on the October expiry day. The measure exceeded its all-time closing high reached in November 2010 yesterday as more companies reported profits that beat forecasts, and amid speculation Federal Reserve stimulus will spur capital inflows. The Reserve Bank of India this week increased cash supply for lenders while raising its key interest rate to fight inflation.

“The RBI policy has been as expected, the Fed has delayed tapering resulting in ample global liquidity and foreign funds are buying Indian shares,” K.K. Mital, a portfolio manager at Globe Capital Market Ltd., said by phone from New Delhi. “The sentiment in the market is positive.”

Bharti Airtel increased 2 percent, extending yesterday’s 5.5 percent rally. Coal India Ltd., the world’s top producer of the fuel, advanced the most since Oct. 4.

Bank of India soared 21 percent to 209.9 rupees, the most since October 2007, after its second-quarter profit more than doubled and net bad loans fell to 1.9 percent from 2.04 percent a year ago. Bank of Baroda had the biggest gain since May 2009 after its earnings beat forecasts. The 13-stocks S&P BSE Bankex closed at its highest level since July 15.

‘Good Earnings’

Quarterly profits at 14 out of 17 Sensex companies that have posted results surpassed analyst estimates, data compiled by Bloomberg show. About 47 percent of the 30 companies in the index missed forecasts in the previous quarter. Overseas funds have bought a net $16 billion of local shares this year, the second highest after Japan among 10 Asian markets tracked by Bloomberg.

“Quarterly earnings have been really good, way beyond expectations,” Sampath Reddy, who manages $5 billion as chief investment officer at Bajaj Allianz Life Insurance Co., said on Bloomberg TV India today. “There’s also global liquidity that is supporting the market.’

Sesa Sterlite may today say its second-quarter profit rose to 16.4 billion rupees, according to the median estimate of 17 analysts in a Bloomberg survey. The stock added 2 percent.

Fed Stimulus

The Fed maintained its $85 billion in monthly bond buying yesterday as expected by strategists, saying it needs to see more evidence that the economy is improving. The central bank is seeking to shield the U.S. economy from the impact of this month’s partial government shutdown. The 16-day closing reduced growth by 0.3 percentage point this quarter, according to the median estimate in an Oct. 17-18 Bloomberg survey.

The Sensex has rallied 9 percent this year and is the best performer among the so-called BRIC nations. It trades at 14.3 times projected 12-month profits, equal to its 5-year average, and compares with the MSCI Emerging Markets Index’s 10.5 times

The CNX Nifty Index increased 0.8 percent to 6,299.15, its highest since Nov. 9, 2010. The India VIX plunged 5.8 percent.

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