Bloomberg/Mumbai
Indian stocks rose, sending the benchmark index to a record, after the rupee climbed to an eight-month high as foreign investors extended Asia’s largest equity-market inflows.
Maruti Suzuki India rallied to an all-time high. Tata Steel gained to a five-week high. Sesa Sterlite and Hindalco Industries surged about 4% each after prices of aluminum and copper rose in London. The rupee strengthened for a fourth day.
The S&P BSE Sensex added 0.2% to 22,095.30 at the close. “The current rally has been aided by improvement in the macroeconomic indicators and hopes of a stable government after the elections,” Prateek Agrawal, chief investment officer at ASK Investment Managers Pvt., which manages $316mn, said in a phone interview yesterday. “India looks attractive to foreign investors compared with other emerging markets.” The opposition Bharatiya Janata Party, favoured by investors seeking a change to revive the economy, is leading in opinion polls as voters punish Prime Minister Manmohan Singh’s Congress party for graft scandals, elevated inflation and the slowest economic growth in a decade. Congress is headed for its worst-ever electoral performance, polls show.
Maruti Suzuki rose for a fifth day. Tata Motors, the owner of Jaguar Land Rover, climbed the most since February 28.
Tata Steel rallied to a one-month high. Sesa was the best performer on the Sensex after a panel appointed by India’s top court suggested restart of iron-ore mining in the western Goa state, where the company owns its biggest mine. Hindalco jumped to the highest level in more than two months. The S&P BSE India Metals Index added 2.7%, a third day of gain. The Sensex has increased 4.4% this year, the best performer among the four largest emerging markets including China, Russia and Brazil. It’s valued at 14 times projected 12- month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index trades at 8.6 times.
The CNX Nifty Index increased 0.2% to 6,601.40. The India VIX jumped 5%.
Meanwhile, India’s rupee rose to an eight- month high and sovereign bonds gained on speculation the world’s largest democracy will elect a government capable of reviving economic growth. The rupee rose 0.5% to 60.1650 per dollar in Mumbai, prices from local banks compiled by Bloomberg show. It touched 60.07, the strongest level since July 30. Gains beyond 60 will be “tough,” and any move past that level will be a trigger for an extended rally in the Indian currency, Nayar said.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 17 basis points, or 0.17 percentage point, to 8.98%.