Indian Stocks Jump Most in Month as Lenders Gain Amid Asia Rally

  • ICICI Bank, Axis Bank, HDFC Bank among top Sensex performers
  • Optimism about progress of key legislation boosting sentiment

India’s benchmark stock index posted its biggest jump in a month amid optimism over the progress of economic bills in parliament and as global equities climbed on speculation the Federal Reserve may raise interest rates gradually.

Bajaj Auto Ltd. and Hero MotoCorp Ltd., the biggest two-wheeler makers, were among the biggest gainers on the S&P BSE Sensex. ICICI Bank Ltd. and Axis Bank Ltd. rose at least 3 percent. Housing Development Finance Corp., India’s largest mortgage lender, rallied to a four-month high. NTPC Ltd., the largest power utility, jumped the most in a month.

The Sensex increased 1.8 percent at the close, the best performance in Asia. Productivity of both houses of parliament has been the highest in a year, according to data from PRS Legislative Research. The lower house last week approved a bill that looks to overhaul century-old bankruptcy laws and make it easier to wind up a dying company or recover dues from a defaulter.  

“Interest-rate sensitives are rallying on expectation that the bankruptcy bill will be passed as a money bill in parliament, which will enable banks to reduce bad debts,” A. K. Prabhakar, the head of research at IDBI Capital Capital Market Services Ltd., said by phone from Mumbai. “Also, company earnings are showing a marked improvement in net interest margins across the board.”

Earnings in the world’s fastest-growing major economy seem to be recovering after the worst run since the global financial crisis. Seven out of 12 Sensex firms that have posted March-quarter results so far beat or matched estimates.

Hindustan Unilever Ltd., the biggest home-products company, reported a quarterly profit of 10.9 rupees, higher than the 10.3 billion rupees estimate of 22 analysts in a Bloomberg News survey. Still, the stock declined 0.9 percent after the company’s sales of 78.1 billion rupees, less than the 79.9-billion rupee estimate.

European and Asian stocks rose after disappointing U.S. payrolls data added fuel to the argument against a Federal Reserve interest rate increase in June.

“The U.S.s non-farm payrolls data suggest that the Fed is unlikely to raise rates anytime soon,” Abhimanyu Sofat, founder at AdviseSure Ventures Pvt. in Mumbai, said by phone. “The earnings season has been better than expected and a good monsoon can trigger further rate cuts in India.”

The Sensex has lost 1.6 percent this year and trades at 15.9 times 12-month projected earnings versus 11.3 for the MSCI Emerging Markets Index. Foreign investors sold $49.3 million of local stocks on May 5, paring this year’s inflows to $1.7 billion. They invested $585 million last month after an inflow of $4.1 billion in March, which was the highest in three years.

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