Indian Stocks Advance for Fifth Day as ITC, Tata Motors Surge

  • Global equities firm on bets the Fed won't raise rates in 2015
  • FMCG, drugmakers rally ahead of next week's earnings season

Indian stocks capped a fifth day of gains, the longest winning streak in three months, as Asian equities climbed amid speculation the U.S. central bank will not increase borrowing costs this year.

Tata Motors Ltd., owner of Jaguar Land Rover, had its biggest two-day advance in more than two years. ITC Ltd., the nation’s biggest tobacco company, posted its biggest gain this year, while Hindustan Unilever Ltd., the largest home-products maker, climbed the most in a week. GAIL India Ltd., a natural-gas supplier, and Coal India Ltd., the world’s biggest producer of the fuel, were among the best performers on the S&P BSE Sensex.

The Sensex added 0.6 percent to 26,932.88 at the close in Mumbai. The gauge has risen 4.5 percent since Tuesday when the Reserve Bank of India cut its interest rate by more than economists’ forecast, capping its biggest five-day climb since Jan. 21. Foreigners were net buyers of Indian shares for a third day on Monday, after pulling $860 million last month, data compiled by Bloomberg show.

“The surprise rate cut by the RBI and a weak U.S. data have brought some cheer to the market,” Kaushik Dani, a fund manager at Karvy Stock Broking Ltd. in Mumbai, said by phone. “There are also some green shoots of recovery in the Indian economy. Markets turn around on perceptions."

The MSCI Asia Pacific Index gained 0.8 percent in a fifth day of advance. The chances of the Federal Reserve raising rates this month have declined to 10 percent amid weaker-than-estimated reports on U.S. employment, manufacturing and services. Most futures traders are now betting on a March hike.

Earnings Visibility

“Investors are positioning themselves for the earnings season by focusing on sectors like healthcare, software exporters, consumer goods and private sector banks, where there is greater visibility of earnings and revenue,” Dani said.

Profits for the 30 Sensex companies climbed 1 percent in the June quarter, following a 45 percent drop in the prior three months, according to data compiled by Bloomberg. While analysts have reduced the estimates for fiscal 2016 profits by 12 percent since the start of April, they predict profits will grow 2.2 percent in the July-September period and 11 percent in the December quarter, the data show.

Tata Motors jumped 5.9 percent, extending Monday’s 5.8 percent advance. The shares rose Monday after the company said the sales of its Range Rover and Evoque SUVs in the U.S. jumped 61 percent last month.

Cipla Ltd. increased 3.7 percent, Dr. Reddy’s Laboratories Ltd. added 1.6 percent and Sun Pharmaceutical Industries Ltd. rose 1.3 percent. ITC surged 4.1 percent, the most since Dec. 4, and Hindustan Unilever advanced 2.4 percent.

Coal India rallied to its highest level since Sept. 18. GAIL climbed 3.3 percent.  

The Sensex has fallen 2.1 percent this year and trades at 15.4 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.

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