Bloomberg/Mumbai
India’s benchmark stock-index posted its biggest weekly advance since June, tracking global equities, after the minutes of the US Federal Reserve indicated that the central bank isn’t in a hurry to raise interest rates. Gains in the S&P BSE Sensex were fuelled by metal producers, energy companies and utilities.
Vedanta, the nation’s largest copper producer, climbed the most in four months, and Hindalco Industries, the second-biggest aluminium maker, increased the most in about four years amid a rally in global industrial metals. Tata Steel rose for a fifth day, the longest winning run in more than seven months. Oil & Natural Gas Corp rallied to almost a two-month high after crude rose above $50 a barrel for a second day.
The Sensex jumped 0.9% to 27,079.51, the highest close since August 21. The gauge has climbed 3.3% this week, rallying after its worst quarterly loss in almost four years, as signs the US Federal Reserve won’t rush to raise interest rates buoyed Asian stocks. The measure will advance about 7% from Thursday’s close to 28,629 in the next 12 months, according to the median estimate in a quarterly Bloomberg News survey of five analysts.
“We’re being supported by positive local and US cues,” Jitendra Panda, chief executive officer at Peerless Securities, said by phone from New Delhi. “Lower raw material costs and the reduction in interest rates” will benefit company earnings, he said.
The MSCI All-Country World Index was heading for its largest eight-day rally since 2011, with the Stoxx Europe 600 Index up for the sixth straight session. Global stocks have been staging a comeback in the wake of their worst quarter since 2011 as signs of an uneven recovery in the US job market and data signalling slowing growth from China to Germany heighten speculation the Fed won’t raise interest rates until next year.
Reserve Bank of India Governor Raghuram Rajan last week took advantage of a rout in commodity prices to lower the policy rate by 50 basis points, twice as much as most economists expected. The increased monetary easing and falling inflation has bolstered the outlook for profits. While analysts have cut the estimates for fiscal 2016 profits by 13% since the start of April, they predict profits will grow 2.2% in the July-September period and 11% in the December quarter, the data show.
Meanwhile the rupee strengthened 1.2 this week and 0.5% yesterday to 64.7350 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. It rose to 64.7250 earlier, the highest level since August 13. The currency rallied 1.4% in September to be Asia’s best performer and its top forecaster sees that position being maintained through year-end.
Overseas funds bought a net $211.9mn of Indian shares this month after withdrawing $3.46bn in August and September. Foreign holdings of rupee-denominated debt have also risen in October. Asian equities and currencies rallied this week as signs the Federal Reserve won’t raise interest rates this year boosted demand for riskier assets. India’s central bank on Sept. 29 cut borrowing costs by more than economists estimated and unveiled a plan to grant foreigners greater access to sovereign bonds.
