India’s Sensex Rises for First Day This Week on Fed Rate Outlook

  • Fed minutes damp speculation of U.S. rate increase this year
  • Foreign investors net buyers for longest stretch since 2013

Indian stocks rose for the first time this week amid increased demand for emerging-market assets after minutes of the Federal Reserve’s last meeting showed officials aren’t in any hurry to raise interest rates.

Power Grid Corp of India Ltd. surged to a record and Adani Ports & Special Economic Zone Ltd. climbed to a nine-month high. Bharti Airtel Ltd. had its steepest increase in a month after Singapore Telecommunications Ltd. bought a stake in the company. Axis Bank Ltd. rose to a 13-month high, while ICICI Bank Ltd. advanced to the highest level in three weeks.

The S&P BSE Sensex added 0.4 percent at the close in Mumbai, the S&P BSE MidCap index rose 0.4 percent to a record and the S&P BSE SmallCap index increased 1 percent. The MSCI Asia Pacific Excluding Japan Index climbed 0.5 percent. The Fed minutes showed officials saw little risk of a sharp uptick in inflation, fueling bets interest rates will stay lower for longer. The odds of a U.S. rate increase this year fell to 49 percent.

“As the Fed keeps postponing the interest-rate hike, the market will flourish with the liquidity it is receiving," said C.A. Rudramurthy B.V., head of research at Vachana Investments Pvt. in Bengaluru. “The continuous flow of foreign money has been so positive that it will keep the liquidity tap running.”

Overseas funds have been net buyers of Indian shares for 26 days in a row, as above-average rainfall after back-to-back droughts improves the outlook on company earnings and global central banks remain supportive of growth. Foreigners bought a net $191 million of local shares on Aug. 12, taking this year’s inflows to $5.6 billion, the most in Asia after Taiwan and South Korea.

The Sensex has rallied 23 percent from a bear market reached in February. Twelve of the 22 companies on the index that have reported June-quarter results have met investor expectations. The stock gauge is valued at 16.4 times projected 12-month earnings, near the highest since April 2015. The MSCI Emerging Markets Index is valued at a multiple of 12.7.

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