The Bombay Stock Exchange. The Sensex jumped 1.4% to 25,841.92 at the close yesterday, rebounding from a 1.5% tumble on Wednesday.

Bloomberg
Mumbai

Indian stocks recouped from a two-month low as equities rallied across Asia after US Federal Reserve meeting minutes stressed that any increases in interest rates would be gradual slow. Automakers and technology shares paced advances.
Bajaj Auto, the second-biggest two-wheeler maker, and Maruti Suzuki India, the largest carmaker, were among the best performers on the S&P BSE Sensex on a report that a government panel may recommend a pay increase of up to 30% for state employees. Infosys, the second-largest software exporter, ended the steepest four-day drop since April.
The Sensex jumped 1.4% to 25,841.92 at the close in Mumbai, rebounding from a 1.5% tumble on Wednesday. Gains were also aided by policy measures to boost the roads and construction sectors, following last week’s decision to relax foreign investment rules in 15 industries, according to Craft Financial Advisors Pvt.
“The rebound has come on the back of positive global newsflow and the reform push by the government,” Ashish Kukreja, chief executive officer at Craft Financial, said by phone from Mumbai. “The pay commission report will be beyond what people are expecting. Auto companies will do very well once the report is implemented.” He is advising clients to buy shares of infrastructure companies and lenders.
Bajaj Auto surged 3.6%, the most since August 28. Maruti Suzuki rallied 2.6%, extending this year’s gain to 40%, the most on the Sensex. A government panel may propose a net increase of 22% over the current salaries for state employees with a 15% raise in basic pay and up to 25% jump in allowances, the Indian Express reported, citing an official it didn’t name. The government may add another 5 to 7%, taking the raise to nearly 30%, the report said.
“We’ve spoken to auto dealers in smaller towns and cities and they say this time there’s a lot of traction in demand, much better than last year,” Kukreja said.
Infosys increased 2.7%, rebounding from the steepest drop since August 24. Vedanta rose 2.8%, paring this year’s loss to 57%. Reliance Industries, owner of the world’s largest refining complex, gained 2.5%, the most since October 19.
The Sensex has dropped 3.1% this month after foreigners pulled $502mn from local stocks and the ruling Bharatiya Janata Party’s loss in Bihar state elections raised concern about its ability to pass reforms. The gauge is valued at 15.2 times its projected 12-month profits, versus a multiple of 11.2 for the MSCI Emerging Markets Index.
The 50-member CNX Nifty Index rose 1.4%. The India VIX Index, a benchmark measure of option costs, plunged 9%, the most since November 9.
Meanwhile, the rupee rose 0.4%, the most since October 23, to 66.055 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg.