India’s Sensex Rises to Record as Rupee Gains on Foreign Inflows

Indian stocks rose, sending the benchmark index to a record, after the rupee climbed to an eight-month high as foreign investors extended Asia’s largest equity-market inflows.

Maruti Suzuki India Ltd. rallied to an all-time high. Tata Steel Ltd. gained to a five-week high. Sesa Sterlite Ltd. and Hindalco Industries Ltd. surged about 4 percent each after prices of aluminum and copper rose in London. The rupee strengthened for a fourth day.

The S&P BSE Sensex added 0.2 percent to 22,095.30 at the close. The currency has risen 2.6 percent this month, the most among major Asian currencies, as global funds plowed a net $3.9 billion into local shares and debt since March 1 amid easing inflation and forecasts for quickening growth, and before the elections due next month.

“The current rally has been aided by improvement in the macroeconomic indicators and hopes of a stable government after the elections,” Prateek Agrawal, chief investment officer at ASK Investment Managers Pvt., which manages $316 million, said in a phone interview today. “India looks attractive to foreign investors compared with other emerging markets.”

The opposition Bharatiya Janata Party, favored by investors seeking a change to revive the economy, is leading in opinion polls as voters punish Prime Minister Manmohan Singh’s Congress party for graft scandals, elevated inflation and the slowest economic growth in a decade. Congress is headed for its worst-ever electoral performance, polls show.

Maruti Suzuki rose for a fifth day. Tata Motors Ltd., the owner of Jaguar Land Rover, climbed the most since Feb. 28.

Metals Rally

Tata Steel rallied to a one-month high. Sesa was the best performer on the Sensex after a panel appointed by India’s top court suggested restart of iron-ore mining in the western Goa state, where the company owns its biggest mine. Hindalco jumped to the highest level in more than two months. The S&P BSE India Metals Index added 2.7 percent, a third day of gain.

Reliance Industries Ltd., the owner of the world’s largest refining complex, climbed 1.4 percent. Oil & Natural Gas Corp., India’s largest explorer, rose 1.7 percent, taking this month’s rally to 12 percent.

Overseas investors bought a net $123 million of shares on March 25, data compiled by Bloomberg show. That extended this year’s inflows to $3.1 billion, the highest among eight Asian markets tracked by Bloomberg.

“We hadn’t expected the amount of money that has flowed in and that’s why the rupee is strengthening,” R. Sreesankar, head of institutional equities at Prabhudas Lilladher Pvt. in Mumbai, said on Bloomberg TV India today.

Policy Meeting

Stocks also climbed on optimism the central bank will not raise borrowing costs at its meeting next week amid an easing in inflation, according to Sun Capital Advisory Services Pvt.

The Reserve Bank of India will keep the repurchase rate at 8 percent, according to 24 of 25 economists in a Bloomberg News survey. One sees an increase to 8.25 percent. Retail inflation eased to a two-year low in February and wholesale prices rose by the least in nine months, official reports showed.

The Sensex has increased 4.4 percent this year, the best performer among the four largest emerging markets including China, Russia and Brazil. It’s valued at 14 times projected 12-month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index trades at 8.6 times.

The CNX Nifty Index increased 0.2 percent to 6,601.40. The India VIX jumped 5 percent.

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