The Bombay Stock Exchange (right) is seen behind the Bombay High Court building in Mumbai. The Sensex jumped 2.2% to 26,785.55 points yesterday, the biggest advance since January 15 and the highest close since August 21.

Bloomberg
Mumbai


India’s benchmark stock index rallied to a six-week high, tracking gains in Asian equities amid speculation disappointing US payrolls data will push the Federal Reserve’s interest-rate increases to next year.
Tata Motors was the best performer on the S&P BSE Sensex after the company said the sales of its Range Rover and Evoque SUVs in the US jumped 61% last month. Housing Development Finance Corp, the top mortgage lender, rose for the first time in three days. ICICI Bank, the largest private lender, had the steepest climb in five months. Maruti Suzuki India tumbled the most in six weeks after Jefferies cut its rating on the nation’s largest automaker.
The Sensex jumped 2.2% to 26,785.55, the biggest advance since January 15 and the highest close since August 21. Eleven of the 30 stocks on the gauge increased more than 3% each. The MSCI Asia Pacific Index jumped 1.4%, tracking Friday’s surge in the US after payrolls climbed less than projected in September, leading traders to shift bets on the first rate increase since 2006 to March next year. Indian markets were closed on Friday for a holiday.
“There’s a global rally as investors are speculating that the Fed rate hike may not come this year,” P Phani Sekhar, a fund manager at Karvy Stock Broking, said by phone. “Last week’s rate cut by the RBI is adding to the cheer.” Phani Sekhar said he’s bullish on software exporters, consumer companies, private lenders and drugmakers.
The Sensex gained 1.4% last week after the Reserve Bank of India reduced borrowing costs by a more-than- expected 50 basis points.
The gauge slumped 5.9% in the three months ended September, its steepest quarterly loss since 2011, and trades at 15.3 times its projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 10.9.
Tata Motors soared 5.8%, narrowing this year’s loss to 36%. Jaguar Land Rover US sales increased to 6,850 units last month, helping offset declining deliveries in China.
Housing Development Finance rallied 5% and ICICI Bank increased 5.2%. Larsen & Toubro Ltd, the most valuable engineering firm, gained for a fourth day.
Maruti Suzuki tumbled 3.6%, the most since August 24 and the worst performer on the Sensex.
Foreigners bought a net $34mn of domestic stocks on September 30, paring outflows in the July-to-September period to $2.6bn, the most for any quarter since 2008.
The withdrawal reduced this year’s inflows into India to $3.6bn, still the most among eight Asian markets tracked by Bloomberg.
Meanwhile the rupee rallied to a six-week high and sovereign bonds advanced amid speculation demand for emerging- market assets will be sustained after weaker-than-expected US jobs data reduced odds the Federal Reserve will increase interest rates this year.
A gauge of the dollar’s strength dropped to a two-week low on Friday after US wages stagnated and the hiring figures disappointed economists. Traders see a 32% probability that the Fed will tighten by December, down from 58% a month ago, according to Fed funds futures data compiled by Bloomberg.
Higher US rates will damp the allure of riskier assets.
The rupee rose 0.3% from October 1 to 65.30 a dollar in Mumbai yesterday, prices from local banks compiled by Bloomberg show.
It had advanced during the day to 65.20, the strongest level since August 20. Indian markets were shut Friday for a public holiday. The currency has climbed 1.3% in the past five days in its longest winning streak since July as India last week relaxed curbs on foreign ownership of its debt.
“The weak US data is leading investors to believe that a hike in interest rates won’t be coming soon,” said Navin Raghuvanshi, a currency trader at DCB Bank in Mumbai. “That’s boosting the rupee” as a delay in US tightening is positive for local assets, he said.
The yield on Indian government notes due May 2025 dropped five basis points to 7.51% on Monday, according to prices from the Reserve Bank of India’s trading system. That’s the lowest level for benchmark 10-year debt since July 2013.
Ten-year bonds completed their biggest weekly gain since June on October 1, with the yield slumping 15 basis points, after the RBI surprised investors with a larger-than-estimated interest-rate cut on September 29 and said the $30bn limit on overseas ownership of sovereign bonds will be raised. Foreign holdings of local corporate and government securities rose Rs6.76bn ($103.5mn) last week, data from the National Securities Depository show.