India’s Sensex Climbs to Record as Central Bank Holds Rates

Indian’s benchmark stock index rose to a record, led by industrials and software exporters, as the central bank left its main interest rate unchanged.

Reliance Industries Ltd., owner of the world’s largest refining complex, climbed to its highest level in about three years. Tata Steel Ltd. rose for a seventh day, helping a gauge of metal companies rise to a 14-month high. Tata Consultancy Services Ltd. and Wipro Ltd., the nation’s largest technology companies, gained at least 2 percent.

The S&P BSE Sensex added 0.3 percent to 22,446.44 at the close after changing direction 24 times. Reserve Bank of India Governor Raghuram Rajan kept the repurchase rate at 8 percent, increasing scope to support growth before elections starting next week. The Sensex completed its biggest monthly advance in five months in March as overseas funds extended Asia’s largest equity-market inflows as inflation cooled and the government forecast smaller budget and current-account shortfalls.

“While the RBI policy was on expected lines, the bigger event is the election as hopes of a stable government coming to power have underpinned the rally,” Jagannadham Thunuguntla, chief strategist at SMC Global Securities Ltd., said by phone from New Delhi. “Foreign inflows are strong and there is money waiting on the sidelines to come in at every dip.”

Overseas investors bought a net $375.4 million of shares on March 27, extending this year’s purchases to $3.61 billion, data compiled by Bloomberg show.

Reliance, controlled by billionaire Mukesh Ambani, rose to its highest level since June 10, 2011. Tata Steel advanced for a seventh day, the longest run of gains since November 2010.

Tata Consultancy jumped the most in a week and Wipro rose the most in almost three months.

Inflation Target

The S&P BSE Bankex of 12 banks declined the most among 13 sector indexes compiled by the BSE. The gauge soared 19 percent last month, the most since October. A measure of 20 engineering companies and equipment makers fell for a second day. It rose to its highest level since Sept. 2011 on March 28.

Today’s rate decision was predicted by 36 of 39 analysts surveyed by Bloomberg. Further tightening isn’t anticipated if consumer-price inflation remains on a path to hit 8 percent in January 2015 and 6 percent a year later, the RBI said today. Retail inflation remains the fastest among 18 Asia-Pacific countries tracked by Bloomberg even after easing in February to 8.1 percent, the slowest pace since January 2012.

Asia’s third-biggest economy grew 4.9 percent in the year ended yesterday, according to official forecasts, compared with a decade-low of 4.5 percent the previous year. An RBI survey today predicted it grew 4.7 percent last fiscal year and would grow 5.5 percent in the year starting today.

Electoral Performance

Subdued growth, rising vegetable prices and graft scandals have put the Congress party’s decade-long rule in jeopardy. The main opposition Bharatiya Janata Party will win the most seats in elections starting April 7 while falling short of a majority, opinion polls show. Results will be announced May 16.

The Sensex has climbed 6 percent this year and trades at 14.2 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 10.1 times.

The CNX Nifty Index rose 0.3 percent to 6,721.05. The India VIX fell 4.3 percent, after climbing 16 percent yesterday.

There were no trades in the bond and currency markets as banks close accounts for the fiscal year that ended yesterday.

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