India Sensex Climbs as Developers Rally Before RBI Policy MeetRajhkumar K Shaaw and Santanu Chakraborty
Indian stocks rose, sending the benchmark index to more than a two-week high, as property developers and health-care companies climbed amid speculation the central bank may cut reserve requirements at its policy meeting Tuesday.
DLF Ltd. increased the most in three weeks, driving up a gauge of real-estate companies by the most in three months. Sun Pharmaceutical Industries Ltd., the most valuable drugmaker, and Aurobindo Pharma Ltd. surged to records. Oil & Natural Gas Corp. had the biggest jump in five months as Brent crude rose.
The S&P BSE Sensex gained 0.9 percent to 28,504.46, after changing direction at least 12 times in the first half of the session. While 30 of the 34 economists surveyed by Bloomberg see the Reserve Bank of India holding the cash reserve ratio, one expects a 25 basis point cut and three expect a 50 basis points reduction.
“Stocks rallied on speculation of a cut in the CRR,” said Rikesh Parikh, vice president at Motilal Oswal Securities Ltd. in Mumbai. A reduction “could release liquidity, boosting real estate, infrastructure and financial stocks,” he said.
State Bank of India, the largest lender, last month said the central bank must cut reserve requirements to help bring down loan rates as two rounds of monetary easing have failed to lower funding costs. The bank estimates a half percentage point reduction in the reserve ratio, which has been 4 percent since February 2013, will free 457 billion rupees ($7.3 billion) for lending. SBI’s base rate, below which it can’t give loans, has been at 10 percent since November 2013 even as the central bank cut its main rate by 50 basis points to 7.5 this year.
DLF jumped the most since March 13. Housing Development & Infrastructure Ltd. surged 24 percent, the most since May 2009 and Unitech Ltd. rallied 8.3 percent.
Sun Pharmaceutical surged 8.2 percent, taking this year’s gains to 41 percent, the most on the Sensex. Aurobindo Pharma rallied 6.2 percent and Dr. Reddy’s Laboratories Ltd. added 4.1 percent.
Foreigners bought a net $183.2 million of shares on March 31 and April 1, taking this year’s inflows to $6.1 billion, the most among eight Asian markets tracked by Bloomberg. The market was shut on Thursday and Friday for holidays.
The Sensex has gained 3.7 percent this year and trades at 15.9 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 12.1.