India Sensex Closes Above Record 26,000 as Software Shares Climb

Indian stocks rose for a second day, with the benchmark Sensex closing above the 26,000-level for the first time, amid speculation the government’s federal budget will this week announce measures to boost growth.

Infosys Ltd. paced gains for software exporters as the rupee weakened the most in more than two weeks. Texmaco Rail & Engineering Ltd. soared to a record before tomorrow’s railway budget. Tata Power Co., India’s biggest power generator outside state control, climbed to its highest level in three weeks on a planned stake sale in an Indonesian mine for $250 million.

The S&P BSE Sensex increased 0.5 percent to an all-time high of 26,100.08 at the close in Mumbai, boosting its rally in 2014 to 23 percent. International investors have poured $10.5 billion into local equities this year on expectations Prime Minister Narendra Modi will help spur an economy growing at near the slowest pace in a decade. The government presents its federal budget on July 10.

“This budget has been keenly awaited as a vision document and depending on what the outcome is, markets will take their cue,” David Pezarkar, chief investment officer for equities at BOI AXA Investment Managers Pvt., said in an interview with Bloomberg TV India.

Software Shares

The Sensex is valued at 16 times projected 12-month profits, the most expensive level in more than three years. The MSCI Emerging Markets Index is trading at a multiple of 11.1.

Infosys rallied 3.1 percent to 3,345.45 rupees, paring this year’s loss to 4 percent, the most on the Sensex. The company will report its earnings for the June quarter on July 11, kickstarting the Indian earnings season.

Larger rival Tata Consultancy Services Ltd. jumped 3.2 percent, while Wipro Ltd. added 2 percent. The rupee lost 0.5 percent to 60.0175 against the U.S. dollar.

Tata Power advanced 3.7 percent to 111.10 rupees. NTPC Ltd., India’s biggest power producer, gained 1.8 percent.

Shares of commercial-vehicle maker Ashok Leyland Ltd. increased 2.9 percent to 37.15 rupees. The company raised 6.66 billion rupees ($111 million) selling shares to large investors at 36 rupees apiece, it said in an exchange filing after markets closed on July 4.

Railway Rally

Texmaco Rail & Engineering jumped 13 percent, extending last week’s 11 percent rally. The stock has surged 237 percent this year.

Kalindee Rail Nirman (Engineers) Ltd. increased 5 percent, taking its advance this year to 82 percent. Titagarh Wagons Ltd. climbed by the daily limit of 5 percent, stretching its rally in 2014 to 193 percent.

The budget may announce 100 percent foreign direct investment in railways tomorrow, ET Now television channel reported, citing Reuters. The government raised railway passenger and freight fares on July 21, giving itself room to cut subsidies after Modi said he’s ready to take unpopular steps to improve India’s fiscal health.

“Indian railways need huge resources to make up for long period of under investment,” Rajesh Kothari, managing director at AlfAccurate Advisors, said in an e-mail today. “New government has signaled that it will do its best to attract investment for projects such as building new railway tracks, modernizing infrastructure, improving safety.”