Indian stocks advanced to a one-week high after the government approved an increase in salaries for civil servants, spurring optimism the payout will bolster consumption that has been the key driver of the nation’s world-beating growth.
Automakers Hero MotoCorp and Tata Motors were the best performers on the S&P BSE Sensex, while Asian Paints climbed the most in a month. Tata Metaliks rose the most in two weeks, and state-run iron ore miner NMDC climbed to a seven-week high after the government approved a new mineral exploration policy. Property developer DLF jumped the most in four months after its billionaire founder brought shares.
The Sensex rose 0.8% at the close, paring its loss since the Brexit vote to less than 1%. The stimulus from higher government wages comes at a time when a revival in company earnings, improving economic data and prospects of above-normal rainfall have put the gauge on course for its first quarterly advance in more than a year.
“Brexit is getting priced in with each passing day,” Ashish Kukreja, chief executive officer at Mumbai-based Craft Financial Advisors, said by phone from Mumbai. “The focus is now on the monsoon, June-quarter earnings, the pay commission’s award and the monsoon session of Parliament where the GST bill is likely to be cleared. We are very positive on the markets.”
The Sensex also tracked global equities, which rose for a second day amid speculation that policy makers will mitigate the damage of the Brexit vote, including a pause in the Federal Reserve’s tightening cycle. The MSCI All-Country World Index rose 1% in London and the Stoxx Europe 600 Index climbed 2.4%. The equity gauge has recouped 5% after tumbling 11% over two days after the vote.
The government would seek to pass a constitutional amendment authorising the goods-and-services tax, known as GST, in the monsoon session of parliament starting July 18, Parliamentary Affairs Minister Venkaiah Naidu said in New Delhi. The tax is the nation’s biggest economic reforms in decades.
Hero MotoCorp jumped 4.5%, the most since March 2, ending four days of losses. Maruti Suzuki India added 1.3% in a second day of advance and Asian Paints gained the most since June 1.
Tata Metaliks surged 5%, taking this month’s rally to 49%. NMDC added 2.5%. Sandur Manganese & Iron Ores advanced the most in a month and Ashapura Minechem surged 8.2%, the most in four months.
Meanwhile the rupee yesterday logged its biggest single-session gain against the US dollar in over three weeks, as a rebound in global equities and currencies buoyed sentiment.
The currency closed at 67.69, up 0.40% from its previous close of 67.95, posting its maximum gain since June 6. The local currency opened at 67.80 a dollar and touched a high of 67.61, a level last seen on June 23.
Asian currencies extended the rally post-Brexit vote battering, with traders pushing back expectations for any near-term rate increase by the Fed. South Korean won rose 0.96%, Malaysian ringgit 0.91%, Singapore dollar 0.37%, China offshore 0.36%, Indonesian rupiah 0.24%, Taiwan dollar 0.22%, Japanese yen 0.1%, Philippines peso 0.1% and Thai baht added 0.06%.
The government will issue fiscal deficit data for the month of May on June 30. Fiscal deficit in April came in at Rs1.37 lakh crore, which is 25.7% of the Budget estimate for 2016-17.
So far this year, the rupee is down 2.26%, while foreign institutional investors (FIIs) have bought $2.75bn in equity and sold $1.98bn in debt markets.The 10-year bond yield has fallen in 10 out of 12 trading sessions. yesterday, the yield closed at seven-week low of 7.444%—a level last seen on 12 May—compared with Tuesday’s close of 7.452%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.881, down 0.38% from its previous close of 96.245.
The rupee closed at 67.69 yesterday, up 0.40% from its previous close of 67.95, posting its maximum gain since June 6
