Reliance Leads Sensex Gain as Commodity Rout Lifts Rate-Cut Odds

Indian stocks climbed the most in a month as a tumble in global commodity prices and an advancing monsoon eased investor concerns about inflation.

Reliance Industries Ltd., owner of the world’s largest refining complex, was the top performer on the S&P BSE Sensex. Sun Pharmaceutical Industries Ltd., the biggest drugmaker by value, rebounded from its steepest plunge on record. Mahindra & Mahindra Ltd., the largest maker of tractors, advanced to its highest level in six months.

The Sensex surged 1.2 percent to 28,504.93 at the close in Mumbai Wednesday. Raw material prices have fallen about 9 percent in the past two months as growth slows in China, the largest buyer of metals and energy. That’s improved the inflation outlook for India, which imports about 80 percent of its oil, and also the odds for a rate cut by the central bank next month. Foreigners have bought a net $1.1 billion of local shares this month, the most among eight Asian markets tracked by Bloomberg.

“The benefits of the commodities downcycle for Indian companies are going to be lasting,” Taher Badshah, co-head of equities at Motilal Oswal Asset Management Co., which has $430 million in assets, said in an interview with Bloomberg TV India on Wednesday. “And that’s being appreciated by the markets.”

Rainfall across the nation in the June-September monsoon season was 7 percent below the 50-year average, according to the weather office. Reserve Bank of India Governor Raghuram Rajan has cut borrowing costs three times in 2015 and linked further policy action to the strength of the monsoons. He’s scheduled to review interest rates on Aug. 4.

GST Report

India’s parliament was adjourned for a second day of the monsoon session as opposition demanded resignations of three key members of Prime Minister Narendra Modi’s party over graft allegations. Modi is seeking to pass bills needed to implement a national sales tax by April, one of India’s biggest reform proposals in decades. A panel submitted the report on the GST Constitutional Amendment Bill in parliament Wednesday.

“Even with all the bickering in parliament, there’s a fairly good chance that the GST bill may go through,” Badshah said. “There’s a good amount of convergence developing across political parties on the proposal.”

Reliance Industries jumped 4.2 percent to a one-year high. Oil & Natural Gas Corp., India’s largest explorer, gained 1.8 percent, its first climb this week.

Sun Pharma climbed 3.6 percent, after tumbling 15 percent on Tuesday after it said revenue will remain flat or decline as it absorbs a rival it bought last year. Cipla Ltd. increased 2.2 percent.

Hindustan Unilever

Three of the four Sensex members that have posted results so far have beaten or matched estimates. Forty percent of the gauge’s 30 members exceeded or matched profit estimates in the March quarter, compared with 47 percent in the December quarter and 67 percent in the July-September period, according to data compiled by Bloomberg.

Hindustan Unilever jumped 3.3 percent. Mahindra & Mahindra gained 3.4 percent, taking this year’s advance to 8.7 percent.

Housing Development Finance Corp. rose 2.6 percent. State Bank of India advanced the most in three weeks and ICICI Bank Ltd., the biggest private lender, increased 1.7 percent.

The Sensex trades at 15.8 times projected 12-month profits, versus 11.5 times for the MSCI Emerging Markets Index. Foreigners sold a net $25 million of Indian stocks on July 21, ending six straight days of inflows.

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