Sensex Rises to Record as Indian Metals Rally on China Rate Cut

Indian stocks advanced to a record, led by metalmakers, after China’s unexpected cut in interest rates spurred a rally in Asian shares.

Aluminum producer Hindalco Industries Ltd. rallied to a two-month high, while Tata Steel Ltd. rose the most in three weeks. Tata Power Co., the biggest non-state generator, was the best performer in the S&P BSE Sensex. Infosys Ltd. rallied to an all-time high after shareholders approved the issue of bonus shares and a stock dividend.

The Sensex gained 0.6 percent to a record 28,499.54 at the close. The MSCI Asia Pacific excluding Japan Index gained 1.1 percent after the People’s Bank of China cut borrowing costs, joining Europe and Japan in boosting stimulus amid a global slowdown. The winter session of India’s parliament began today amid expectation Prime Minister Narendra Modi’s government will pass key bills to cut red tape and open the economy to further foreign investment.

“We think that India is the best game in town as far as emerging markets are concerned,” Manishi Raychaudhuri, the head of Indian equity research at BNP Paribas Securities Asia Ltd., said in an interview to Bloomberg TV India today. “The policy and political transition that India has could likely lead to a shift in its trajectory of growth.”

The Sensex has advanced for five straight weeks as global funds bought $15.4 billion of shares, the most in Asia, and on speculation easing price pressures has given the central bank more room to cut borrowing costs at its policy review on Dec. 2.

Monetary Policy

Reserve Bank of India Governor Raghuram Rajan has held the repurchase rate at 8 percent after raising it three times from September 2013 through January to curb price pressures. Finance Minister Arun Jaitley said Nov. 17 that a rate cut would give a “good fillip” to the economy, according to a report by the Press Trust of India.

The month-long parliament session will prove a key test for Modi’s reform agenda as he seeks to lift the cap on foreign investment in insurance, pass a new goods and services tax and make it easier to buy land.

Hindalco climbed 3.3 percent, the second-best performer on the Sensex. Tata Steel Ltd., the biggest producer of the alloy, surged 3 percent, ending a three-day drop. State-owned Steel Authority of India Ltd. jumped 3.9 percent, while Jindal Steel & Power Ltd. rallied 4.3 percent, the most on the S&P BSE Metal Index. The gauge of metalmakers rose 1.6 percent.

“The booster shot from China could possibly slow the overall commodities meltdown we are seeing,” Prakash Diwan, a director at Altamount Capital Management Pvt., told Bloomberg TV India today. “Things are not so bad for non-ferrous metals like aluminum and the uptick will be much sharper and faster.”

Exporters, Lenders

Infosys added 3.1 percent, while Tata Consultancy Services Ltd., the largest software exporter, rose 1.4 percent. Wipro Ltd., the third-biggest, increased 1.3 percent.

State Bank of India Ltd. rose to a four-year high. ICICI Bank Ltd. jumped 2.5 percent to an all-time high. Tata Power rallied 4.2 percent to its highest level since Nov. 11. Bharat Heavy Electricals Ltd. gained 2.1 percent.

The Sensex has risen 35 percent this year, the best performer among the world’s 10 biggest markets. The gauge is valued at 15.9 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.3.

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