Sensex Index Climbs for Eighth Day as Coal India Leads AdvanceRajhkumar K Shaaw
Indian stocks advanced for an eighth day, sending the benchmark index above its 200-day average for the first time in three weeks, as a pickup in monsoon rains eased inflation concerns.
Coal India Ltd., the world’s biggest miner of the fuel, was the best performer on the S&P BSE Sensex. Larsen & Toubro Ltd., the largest engineering company, rallied to a two-month high. Cigarette maker ITC Ltd. advanced for an eighth day and Mahindra & Mahindra Ltd., a tractor maker, rose to its highest price in five months.
The Sensex added 0.3 percent to 27,804.37 at the close in Mumbai. The gauge capped its longest winning run since January as above-normal rains in an El Nino year improved the outlook for further easing in monetary policy, and optimism Greece will strike a deal with creditors sent global stocks higher. India’s central bank on June 2 said it will assess monsoon rains before cutting borrowing costs for a fourth time this year.
“There’s hope of a rate cut coming through before the next credit policy, given the progress and distribution of the monsoon,” Gaurang Shah, a vice president at Geojit BNP Paribas Financial Services Ltd., said in an interview with Bloomberg TV India on Tuesday. The better-than-forecast rainfall has allayed “the scare we had when the monsoon season started,” he said. The central bank is scheduled to review rates on Aug. 4.
Monsoon rainfall has been 23 percent above normal since the start of the season on June 1, with about 80 percent of the nation receiving excess to normal showers. The weather office on June 2 predicted that rains would be deficient for a second year, sparking concern that rising food costs will curb the Reserve Bank of India from easing monetary policy further. A sell-off in equities through the three weeks ended June 14 had dragged the Sensex below its 200-day mean.
Coal India surged 3.9 percent, the steepest advance since June 5. Larsen & Toubro climbed 2 percent, taking this year’s gains to 18 percent. ITC added 1.3 percent to its highest level since June 2.
Bharti Airtel Ltd., the nation’s largest cellular-phone operator, climbed, bringing its year-to-date advance to 22 percent. Mahindra & Mahindra added 1.8 percent, extending last week’s 9.4 percent surge.
International investors sold a net $17 million of Indian stocks on Friday, June 19, paring this year’s inflow to $6.3 billion.
The Sensex has risen 1.1 percent this year and trades at 15.6 times projected 12-month profits, versus the five-year average of 14.4. The MSCI Emerging Markets Index is valued at a multiple of 12.
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