Indian Stocks Climb Most in Month as Automakers Rally on Sales

  • Maruti Suzuki jumps to record after sales rise most in 2 years
  • Asian stock advance as concerns over European banks fade

Automakers helped Indian stocks climb for a second day after the nation’s largest carmaker reported its biggest sales growth in more than two years.

The benchmark gauges recouped half of last week’s 2.8 percent tumbled spurred by India’s attacks on militants in Pakistan late Wednesday. Investors looked past the offensive as both nations have since moved to curb military tensions.

IndexChangeSize and Scope
BSE Sensex+1.4%Most in month
Nifty 50+1.5%Second day of gain
S&P BSE MidCap+2.4%Record
S&P BSE Auto Index+2.4%Four-week high

“There’s a sense of relief as the border tension doesn’t seem to have escalated further," Jagannadham Thunuguntla, head of research at Karvy Stock Broking Ltd., said by phone from Hyderabad. “Some smart investors are using it as a buying opportunity."

Indian stocks on Friday capped their worst week since February on concern the attacks may sour sentiment among foreigners who bought the most shares last quarter since March 2015. Birla Sun Life Asset Management Co. said it will look to deploy cash as the declines present a buying opportunity. India’s fourth-largest money manager had doubled its cash levels to 8 percent as local equities neared record highs and concerns about weakness among European banks buffeted markets.

Investors are also awaiting new Reserve Bank of India Governor Urjit Patel’s first monetary policy review Tuesday. Economists are divided on the outcome, with 20 of the 37 surveyed by Bloomberg predicting no change in the benchmark rate and the rest seeing a cut.

The government last month announced three candidates to join an equal number of central bank representatives on a new monetary policy committee, paving the way for India’s first collective interest-rate decision. Each of the six members will have a vote, with Governor Patel holding an additional tie-breaker, though he won’t be able to veto a majority decision.

Buoyancy in Asian equities rubbed off on India, with the MSCI Asia Pacific Index recouping more than half of the last session’s decline. Relief spread across U.S. and European stock markets on Friday as Agence France-Presse reported Deutsche Bank AG is lining up a less-costly settlement with U.S. regulators than investors had feared. The financial woes of Germany’s biggest lender as it struggles with tougher capital standards and soaring legal bills adds to a list of market risks that includes Brexit and tightening U.S. monetary policy.

  • Maruti Suzuki India Ltd., the maker of half the cars sold in India, said its sales last month increased 31 percent, the most since June 2014. The company sold 149,143 vehicles locally, a record. Tata Motors Ltd., owner of Jaguar Land Rover, added 1.1 percent. Mahindra & Mahindra Ltd. rallied to a three-week high.

    “Disposable incomes are rising and consumers are willing to spend more on cars and other consumer durable items,” said Arun Kejriwal, a director at Kejriwal Research & Investment. “This also could be due to salary increases paid out to government staff, access to easy finance and stable fuel prices.”

  • Hero MotoCorp Ltd. climbed 3.2 percent, the most since Aug. 5, after its September sales rose 11 percent to a record 674,961 units.

  • Larsen & Toubro Ltd. increased 2.6 percent after winning an order valued 60 billion rupees ($900 million).

  • Indraprastha Gas Ltd. advanced 1.6 percent and Mahanagar Gas Ltd. gained 1.4 percent after lowering prices of compressed natural gas.
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