Indian Stocks Extend Last Week's Gain as Rally Resumes in Asia

  • Investors await consumer inflation data; BOJ, U.S. Fed reviews
  • Global funds have bought $1.5b of domestic shares this month

Indian stocks climbed to a six-week high as foreign funds added to their holdings of domestic shares and a global stocks rally gathered momentum in Asia.

Tata Motors Ltd. gained for a ninth day, its longest winning streak since 2003. ICICI Bank Ltd. was the best performer on a gauge of 13 lenders, while State Bank of India climbed the most in a week. Coal India Ltd., the biggest miner of the fuel, climbed for the first time in five days. A gauge of small-cap shares rose to a one-month high.

The S&P BSE Sensex rose 0.4 percent to 24,804.28 at the close in Mumbai. The gauge capped a second weekly advance on Friday as overseas investors bought $65 million of local shares March 11, boosting the month’s inflow to $1.5 billion. Risk appetite has returned globally before central banks including the U.S. Federal Reserve review policy this week.

“Investors are focusing on the global central bank meetings," Vikas Gupta, an executive vice president at Arthveda Fund Management Pvt. in Mumbai, said by phone. “The central bank firepower is limited. The market will be driven by basic economic data.” He prefers consumer companies and makers of appliances.

Policy Reviews

Central banks are being relied on to revive the global economy after a worsening growth outlook wiped almost $9 trillion off the value of equities worldwide this year through mid-February. The bulk of the stock-market losses have been clawed back, helped by monetary easing in China and last week’s announcement of unprecedented stimulus by the European Central Bank. The Bank of Japan will conclude a policy review on Tuesday and a Federal Reserve meeting ends Wednesday.

In India, equities have risen in eight out of 10 days after Finance Minister Arun Jaitley in his Feb. 29 federal budget pledged to further cut the fiscal deficit, stoking speculation of an interest-rate reduction by the central bank. Policy measures to boost economic growth, including the passage of the real-estate bill and easing rules for mining companies, have added to the momentum.

Reserve Bank of India Governor Raghuram Rajan said the central bank was "comforted" by Prime Minister Narendra Modi’s plan to shrink the budget deficit to 3.5 percent of GDP while telling reporters to "wait and see" how that feeds into monetary policy. He is due to review policy on April 5 as he looks to keep CPI within 5 percent by March 2017.

“While chances of a rate cut in India have increased, Rajan may do something different because he doesn’t want people to out-guess him,” Gupta said. “He likes to surprise.”

India’s wholesale prices fell more than estimated ahead of benchmark consumer data due later on Monday. Consumer prices may have climbed 5.5 percent from a year earlier last month, compared with 5.7 percent in January, according to the median estimate of 32 economists in a Bloomberg survey. That compares with January’s 5.69 percent gain.

Tata Motors rallied 3.4 percent to its highest price since Jan. 5. The stock has surged 22 percent so far this month. ICICI Bank increased to its highest close since Jan. 29. State Bank of India added 0.9 percent.

Coal India rallied 1.8 percent to 296.70 rupees. The Economic Times newspaper reported Monday the company may buy back 5 percent of its equity at 330-340 rupees per share.

Pfizer India Ltd. tumbled 9 percent, the since January 2008, after the company said it has discontinued making Corex cough syrup. The government banned the sale of fixed dose combination of Chlopheniramine Maleate and Codeine syrup with immediate effect, the drugmaker said in a filing. Corex recorded sales of 1.76 billion rupees in the April-December period, the company said.

The Sensex has fallen 5 percent this year and trades at 15.2 times 12-month projected earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.6.

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