Indian Stocks Climb to One-Month High in Special Diwali Trading

Indian stocks advanced, sending the benchmark index to a one-month high in a shortened trading session. Energy companies led the increases.

Oil & Natural Gas Corp., India’s largest state-owned oil explorer, climbed for the first time in three days. Reliance Industries Ltd., owner of the world’s largest refining complex, rose to a one-week high. Bajaj Auto Ltd. rallied to a record. Wipro Ltd., India’s third-biggest software exporter, fell the most in two weeks after its profit missed estimates.

The S&P BSE Sensex increased 0.2 percent to 26,851.05 in special Diwali trading in Mumbai, a fifth day of gains and the highest since Sept. 22. The gauge rallied 2.8 percent this week. Stocks rose this week, ending four weeks of decline, amid expectation Prime Minister Narendra Modi will accelerate policy changes to boost economic growth. Modi ended price curbs on diesel, raised natural-gas tariffs and moved closer to ending the state’s monopoly on mining and selling coal to cut subsidies and narrow the fiscal deficit.

“The government has got on the front foot as far as the reforms are concerned,” Sanjay Sinha, founder of Citrus Advisors Pvt., said in an interview to Bloomberg TV India today. “The announcement on gas prices and diesel deregulation seem to be the beginning of something much larger.”

Investors and traders made ceremonial purchases of stocks in an hour-long trading session until 7:30 p.m., marking Diwali, the festival of lights and the start of the Hindu new year, Samvat 2071. The session known as Muhurat trading is held every year on Diwali and deemed the most auspicious time to start investments.

Foreign Inflows

The Sensex has risen 26 percent since last Diwali on Nov. 3, 2013, the best performer in the period among the world’s 10 biggest markets, buoyed by purchases by foreigners. Shares of all 30 index members have risen since last year’s Muhurat day, led by Maruti Suzuki India Ltd. and Axis Bank Ltd. The gauge is valued at 15.5 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.6.

Global investors bought $18.8 million of local stocks on Oct. 21, taking inflows in 2014 to $13.3 billion, the highest among eight Asian markets tracked by Bloomberg.

“The way the local factors have arranged themselves we seem to be in a very good environment as far as the equity-market outlook is concerned,” said Sinha. The Sensex could climb to 35,000 by December next year barring “a major accident on the global front in the next 12 months,” he said.

Earnings Scorecard

Bajaj Auto gained 1.4 percent to 2,529.70 rupees, an all-time high. The stock, up 32 percent this year, was the top performer on the Sensex today. ONGC added 1 percent, while Reliance added 0.8 percent.

Wipro plunged 4 percent, the most since Oct. 8. The company yesterday reported after market hours second-quarter profit of 20.8 billion rupees, missing the 21.1 billion rupees estimated by 41 analysts in a Bloomberg News survey.

Five of the nine Sensex companies that have posted results so far have exceeded or matched estimates, data compiled by Bloomberg show. Forty-six percent of the gauge’s members that posted earnings for the June quarter beat or matched forecasts. That compares with 60 percent in the previous three months.

The CNX Nifty Index added 0.2 percent to 8,014.55. The India VIX, which gauges the cost of protection against losses in the Nifty, fell 1.3 to a one-month low. Stock exchanges will remain closed tomorrow.

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