India’s Sensex Climbs to Record Ahead of Rate Decision Tomorrow

Indian stocks climbed to a record, led by metal companies and automobile producers, ahead of the central bank’s monetary policy tomorrow.

Aluminum producer Hindalco Industries Ltd. soared the most in seven months, sending the S&P BSE India Metals Index to its highest level since February 2013. Carmaker Maruti Suzuki India Ltd. rallied to an all-time high. Property developer Unitech Ltd. soared 16 percent.

The S&P BSE Sensex rose 0.2 percent to 22,386.27 at the close. The gauge completed its biggest monthly gain in five months after foreigners extended Asia’s largest stock-market inflows and the rupee climbed to an eight-month high. Banks from Morgan Stanley to HSBC Holdings Plc expect the Reserve Bank of India to halt raising interest rates as inflation slows.

“There is not a huge amount of reason for the RBI to tighten further,” Tai Hui, chief Asia market strategist at JPMorgan Asset Management in Hong Kong, said in an interview to Bloomberg TV India today. “The RBI is no hurry to cut either” as the U.S. Federal Reserve has begun the process of reducing its monthly bond purchases, he said.

RBI Governor Raghuram Rajan, who raised the repurchase rate three times since he took office in September, will keep the benchmark at 8 percent, according to 36 of 39 economists surveyed by Bloomberg. Three see an increase to 8.25 percent. Consumer-price gains cooled to 8.1 percent in February from 11.2 percent in November, the highest in at least two years, government data show.

Hindalco jumped 8.3 percent, taking this month’s rally to 35 percent, the best performance on the Sensex. Copper producer Sesa Sterlite Ltd. gained 3.1 percent to its highest since Feb. 18. Steel Authority of India Ltd. soared 10 percent, the most since May 2009. The BSE Metal index rose 3.9 percent, extending this month’s rally to 16 percent.

Developers Rally

Unitech had the biggest gain since October 2012. Housing Development & Infrastructure Ltd. surged 6 percent. Cement maker ACC Ltd. added 2.7 percent, extending this month’s rally to 27 percent, the biggest monthly advance since April 2006.

“Investors are buying old-economy stocks” as economic indicators improve and amid expectation that project approvals and spending will pick up when a new government is formed after elections ending in mid-May, Hemant Kanawala, head of equities at Kotak Mahindra Old Mutual Life Insurance Ltd., which has $2 billion in assets, told Bloomberg TV India today.

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.

Rupee Rebound

Maruti rose 2.1 percent to highest since its July 2003 listing. Mahindra & Mahindra Ltd., India’s largest maker of sport-utility vehicles and tractors, gained 1.3 percent.

The Sensex has risen 5.7 percent this quarter, surpassing stock indexes in Brazil, Russia and China, and the rupee has rebounded 15 percent from a record low in August as improving public finances and easing inflation attract inflows. Foreign funds have plowed $9.3 billion into local shares and bonds this year, the most among eight Asian markets tracked by Bloomberg.

The rupee has rebounded 15 percent from a record low in August as global investors pour money into Indian assets. They bought a net $375.4 million of shares on March 27, a 12th day of inflows, data compiled by Bloomberg show. The Sensex trades at 14.1 times projected 12-month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index is valued at 9.6 times.

The CNX Nifty Index increased 0.1 percent to 6,704.20. The India VIX surged 16 percent, the most since Jan. 27.

Indian banks and currency and money markets are shut today for a public holiday.

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