India’s Sensex Halts Seven-Day Drop on RBI Comments, Earnings

Indian equities rallied, snapping the longest losing streak in three months, after the central bank predicted the current-account deficit will shrink from a record and Tata Steel Ltd. earnings topped estimates.

ICICI Bank Ltd. climbed the most in two weeks, helping an industry measure end its longest losing stretch in two years. Tata Motors Ltd., owner of Jaguar Land Rover, rallied the most in two months. Tata Steel climbed to its highest level since February after posting earnings that beat estimates. The rupee gained for a second day.

The S&P BSE Sensex added 1 percent to 20,399.42 at the close, ending a seven-day, 4.9 percent slide. The gap in the broadest measure of trade will narrow to around $56 billion in the year ending March 2014, from $88 billion in the previous 12 months, and the central bank will meet liquidity needs adequately, Governor Raghuram Rajan said yesterday.

“Investors are taking confidence from Rajan’s comments, which show he will try to balance growth and inflation,” Paras Bothra, vice president for equity research at Ashika Stock Broking Ltd., said by phone from Kolkata.

The Sensex pared an intraday gain of 1.9 percent after official data showed wholesale-price inflation quickened to 7 percent in September, compared with a forecast of 6.95 percent. Consumer prices rose to 10.09 percent last month, the fastest in a basket of 17 Asia-Pacific economies tracked by Bloomberg, data showed on Nov. 12. Rajan has made the fight against rising prices a priority since taking charge in September. He raised the benchmark rate to 7.75 percent from 7.5 percent last month.

“Inflation has been sticky due to a rise in food costs, which are beyond the scope of monetary policy,” said Bothra.

Earnings Scorecard

Tata Steel gained 4.9 percent to its highest level in nine months after the company returned to profit, reporting earnings that were almost triple analysts’ estimates because of higher demand and a deferred-tax benefit. Earnings were announced after trading ended yesterday.

Coal India Ltd. fell 3.7 percent after the world’s largest producer of the fuel posted its second profit decline in a row as costs rose and waning demand damped prices. Drugmaker Cipla Ltd. fell for a fourth day after reporting a 25 percent drop in net income to 3.76 billion rupees ($60 million). That missed the median estimate of 3.88 billion rupees in a survey.

Net incomes at 21 of the 30 companies in the Sensex that have reported results exceeded analyst estimates, according to data compiled by Bloomberg. About 47 percent of the 30 index members missed forecasts in the previous quarter.

Tata Power, SBI

Tata Power Co. advanced 1.2 percent, ending three days of losses. The nation’s biggest non-state-owned generator posted second-quarter profit of 749.7 million rupees versus a loss of 838 million rupees.

ICICI Bank jumped 3.7 percent, the most since Oct. 29. State Bank of India, the nation’s biggest lender, gained 1.5 percent, the most since Nov. 1. The S&P BSE Bankex rallied 2.7 percent, ending an eight-day, 9.6 percent decline.

Tata Motors surged 5.7 percent to 387.05 rupees. The stock has rallied 24 percent this year, the best-performing automaker on the Sensex. Tractor producer Mahindra & Mahindra Ltd. gained 3.3 percent and Maruti Suzuki India Ltd., the nation’s biggest carmaker, added 2.1 percent.

Global funds bought a net $59.2 million of local shares on Nov. 12, a 27th day of purchases, the longest consecutive inflow since the 35 days through Feb. 15.

The Sensex has gained 5 percent this year and trades at 13.4 times projected 12-month profits, compared with MSCI Emerging Markets Index’s 10.4 times. The Indian gauge is the best performer among the BRICs this year.

The CNX Nifty Index increased 1.1 percent to 6,056.15. The India VIX fell 5.8 percent.

Indian markets are closed tomorrow for a public holiday.

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