India Stocks Trade Near 7-Month High as Economic Growth Quickens

  • March-quarter GDP growth +7.9% vs 7.5% median estimate
  • FIIs bought $383m of Indian shares in May, most in Asia

Indian stocks advanced for the sixth time in seven days as data showing Asia’s third-biggest economy expanded faster than earlier estimated boosted investor confidence.

Adani Ports & Special Economic Zone Ltd. rose the most in five weeks. ITC Ltd., the biggest cigarette company, surged to a 15-month high. Bharti Airtel Ltd., India’s largest mobile-phone operator, gained the most in a month. Tata Consultancy Services Ltd., the largest software exporter, posted the biggest jump since April 11.

The S&P BSE Sensex climbed 0.2 percent at the close in Mumbai, extending last month’s 4.1 percent gain. Gross domestic product grew 7.9 percent in the March-quarter, faster than the 7.5 percent median estimate in a Bloomberg survey. The figures cement India’s position as a bright spot among emerging markets as China slows while Russia and Brazil see contractions.

“The GDP data has reinforced India’s growth story," Vikas Gupta, an executive vice president at Arthveda Fund Management Pvt., said by phone from Dubai. “Overseas funds may raise their allocations to India, given the nation’s growth differential compared with the rest of the world. The outlook for the monsoon and a turnaround in company earnings makes us positive on the market.”

A recovery in corporate profitability after declines in four of the last five quarters and forecast for above-average rainfall following two successive droughts has lifted investor confidence in Asia’s fourth-biggest stock market. Overseas funds bought $383 million of local stocks last month, the highest among eight Asian markets tracked by Bloomberg.

Sixty six percent of the companies in the NSE Nifty 50 index posted earnings in the March quarter that exceeded or matched estimates. This compares with 52 percent in the three months ended December, data compiled by Bloomberg show. Sales for Sensex companies rose 7 percent year-on-year after five straight quarters of declines, the data show.

Adani Ports surged 5.3 percent, the best performer on the Sensex. ITC jumped 3 percent to its highest price since Feb. 27, 2015. Asian Paints Ltd. rallied 3.7 percent to a record. Bharti added 3.4 percent, the most since April 27. Tata Consultancy climbed 2.5 percent to extend this year’s gain to 8 percent.

The Sensex has climbed 2.3 percent so far this year and is valued at 16.5 times 12-month projected earnings, compared with a multiple of 11.5 for an index of emerging markets.

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