Sensex Climbs to Record as Larsen, HDFC Gain on Indian Earnings

Indian stocks advanced, with the benchmark index climbing to a record, after Larsen & Toubro Ltd. and Housing Development Finance Corp. reported earnings that exceeded estimates.

Larsen, India’s largest engineering company, was the best performer on the S&P BSE Sensex. Housing Development Finance, the biggest mortgage lender, rallied for a third day. Axis Bank Ltd. rose the most in seven weeks. Drugmaker Sun Pharmaceutical Industries Ltd. had its biggest two-day rally since October.

The Sensex increased 0.2 percent to 21,373.66 at the close after changing direction at least 15 times. All eight companies on the index that have posted earnings for the quarter ended Dec. 31 have beaten analyst estimates.

“While good earnings are providing a floor to the market there’s no clarity on whether the Reserve Bank will maintain or raise rates,” D.K. Aggarwal, chairman of New Delhi-based SMC Investments & Advisors Ltd., said by phone today.

Twenty five of the 28 economists surveyed by Bloomberg predict Reserve Bank of India Governor Raghuram Rajan will leave interest rates unchanged on Jan. 28. Still, a panel set up by the RBI to strengthen the nation’s monetary policy framework this week recommended setting an consumer price inflation target of 4 percent, raising concern the central bank will need to increase borrowing costs.

Rajan has made the battle against consumer-price increases a priority since taking over the RBI in September. He raised the benchmark repurchase rate twice before leaving it unchanged at 7.75 percent at the last review on Dec. 18.

Larsen, HDFC

Consumer prices rose 9.87 percent in December from a year ago, the fastest pace in a basket of 17 Asia-Pacific economies tracked by Bloomberg. The gauge has averaged 9.88 percent since it was created in 2011 as supply bottlenecks in everything from food to fuel stoke price rises.

Larsen jumped 2.8 percent, its steepest climb since Dec. 9. The company reported after trading ended yesterday that net income rose 11 percent to 12.4 billion rupees ($201 million), beating the median estimate of 11.7 billion rupees.

Housing Development gained 1.8 percent to 856.15 rupees. The company yesterday posted a 12 percent gain in third-quarter profit to 12.8 billion rupees. That compared with the 12.7 billion-rupee median in a Bloomberg survey.

Axis Bank added 2.3 percent, the most since Dec. 6. Sun Pharmaceutical increased 2 percent to 609.35 rupees.

Overseas investors bought a net $46.6 million of shares on Jan. 22, taking this month’s purchases to $443.4 million, data compiled by Bloomberg show. They plowed $20 billion last year, the most in Asia after Japan, and $24.6 billion in 2012.

The Sensex has risen 1 percent this year and is valued at 13.3 times projected 12-month profits, compared with the five-year average of 14.4 times. The MSCI Emerging Markets Index is valued at 9.2 times.

The CNX Nifty Index rose 0.1 percent to 6,345.65. The India VIX fell 1.7 percent.

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