Sensex climbs; rupee strengthens

India’s benchmark stock index climbed to a three-month high in volatile trading as auto and technology companies climbed before the central bank’s policy meeting tomorrow.Mahindra & Mahindra was the best performer in the S&P BSE Sensex as March sales grew 17%. Tata Motors climbed 2.3% on increased sales of Jaguar Land Rover in the US Infosys rallied to a record. Bharti Airtel, the top cellular-phone operator, gained after news reports said the spectrum usage charges have been reduced for upcoming auctions.The benchmark S&P BSE Sensex rose 130 points to 25,399.65 points yesterday,  its highest close since January 6, after changing direction 10 times. The gauge posted its first weekly drop in five weeks on Friday. The retreat follows the steepest monthly gain since 2012 as a government pledge to further cut India’s fiscal deficit and speculation of an interest-rate cut spurred capital inflows. Global funds bought $229mn of local shares on March 30, taking this year’s inflows to $534mn.“The market is building in hopes of a 50-basis point rate cut tomorrow,” Pankaj Sharma, head of equities at Equirus Securities, said in an interview. “Growth in auto sales in March is also giving investors confidence.”Twenty-eight of 31 economists surveyed by Bloomberg see the Reserve Bank of India cutting the repurchase rate to 6.5% from 6.75% today, one predicts no change while two forecast a reduction to 6.25%. That’s where the benchmark will stay through September 2017, according to a separate survey published March 31.Mahindra & Mahindra jumped 4.2% while Tata Motors advanced 2.3%. Bajaj Auto added 1.2% after last month’s sales rose 22%.“Improving auto sales signals a pick-up in demand for consumer-discretionary items, and the only thing left is a recovery in corporate spending, which may get a boost from a rate cut,” Vikas Gupta, an executive vice president at Arthveda Fund Management in Mumbai, said by phone.Bharti Airtel gained 3.8% after Bloomberg TV India reported that a government panel has cut spectrum usage charge for airwaves bought in the forthcoming auctions. Rival Idea Cellular jumped almost 6% to its highest price since January 21, while Reliance Communications added 2%.ITC, Asia’s second-largest cigarette maker by market value, declined the most in a week after it shut its cigarette plants in protest against a new government rule mandating bigger health warnings on its packs. The stock fell 1.5%.The Sensex has retreated 3% this year and trades at 15.5 times 12-month projected profits versus 11.7 for the MSCI Emerging Markets Index. Meanwhile the rupee closed marginally higher against the US dollar yesterday, a day ahead of the Reserve Bank of India’s bi-monthly policy. The rupee has recouped most of the losses it made earlier this year and is just 0.08% lower so far this year.The currency closed at 66.21, up 0.06% from its previous close of 66.25. The rupee opened at 66.30 and touched a high of 66.10, a level last seen on December 31, 2015. This was the sixth consecutive session when the rupee closed higher.India’s 10-year bond yield closed at 7.415% — a level last seen on 20 June 2013, as compared with its Friday’s close of 7.465%. It opened at 7.449% and touched a low of 7.415%, a level last seen on 4 July 2013.The Nikkei/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to an eight-month high of 52.4 in March from February’s 51.1, its third straight month above the 50 mark that separates growth from contraction.FIIs have turned net buyers in local equity markets so far this year. FIIs have bought $534.10mn from local equity and sold $1.23bn in debt markets.Most Asian currencies closed lower. China renminbi was down 0.44%, Philippines peso 0.35%, Thai baht 0.31%, Malaysian ringgit 0.26%, Indonesian rupiah 0.17%, Taiwan dollar 0.16%, China offshore spot and Singapore dollar were down 0.11% each. However, South Korean won was up 0.69%.The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.759, up 0.15% from its previous close of 94.619.