Indian Stocks Rise, Capping Best Month in 17 Years, on Growth
May 29 (Bloomberg) -- Indian stocks rose, capping their best month in 17 years, after a government report showed faster- than-expected economic growth last quarter. The rupee rallied.
DLF Ltd., the nation's largest developer, jumped 9 percent and Larsen & Toubro Ltd., the biggest engineering company, added more than 4 percent. Gross domestic product expanded 5.8 percent in the three months to March 31, beating the 5 percent median economist forecast in a Bloomberg News survey.
"There is reason to be optimistic for investors as this can be taken to mean the economy is on a rising growth path," said Murthy Nagarajan, who manages the equivalent of $181 million in Indian assets at Mirae Asset Global Investment in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 329.24, or 2.3 percent, to 14,625.25. The S&P CNX Nifty Index on the National Stock Exchange added 2.6 percent to 4,448.95. The BSE 200 Index increased 2.3 percent to 1,772.82.
The rupee advanced 0.8 percent to 47.23, the biggest gain since May 18. The rupee gained 6 percent in May, the most since 1973, according to Bloomberg data.
Overseas investors have bought $3.7 billion of more local equities than they sold this year. Inflows accelerated on speculation the Congress government, with almost twice as many seats as the main opposition, may reduce barriers to foreign investment in insurers and retailers, plans that had been blocked by its former communist allies.
Election Rally
The Sensex has surged 28 percent in May, its biggest monthly gain since March 1992, when the index climbed 51 percent. Gains were boosted by a 17 percent rally on May 18, the first day of trading after the ruling Congress party's biggest election victory in two decades.
DLF jumped 9 percent to 406.50, the highest since Sept. 22. Larsen & Toubro rose 4.2 percent to 1,402.20, the highest in more than nine months.
Mahindra & Mahindra Ltd., the nation's largest maker of sport-utility vehicles, gained 5 percent to 668.90. The company reported during late trading yesterday a better-than-estimated 89 percent surge in fourth-quarter profit.
State-owned Indian Oil Corp. led gains by refiners after Oil Minister Murli Deora said he will seek Cabinet approval to free fuel prices from government control.
"The government has taken notice and is working on" a proposal, said Deora, who was re-appointed oil minister yesterday. "We will take it up to the Cabinet in six weeks."
Indian Oil, the biggest state-run refiner, gained 6.8 percent to 609 rupees. Bharat Petroleum Corp., the second- biggest, climbed 3.7 percent to 464.70 rupees, while Hindustan Petroleum Corp. added 8.4 percent to 362.95 rupees.
Earnings Concerns
The Sensex index may extend its election rally by another 5 percent before slumping on earnings concerns, Kotak Securities Ltd. said yesterday. Shares in the Sensex trade at an average 14.9 times future earnings, up from their 2009 low of 8.83 on March 11, according to data compiled by Bloomberg.
"The markets are highly overvalued at the current levels," said R.K. Gupta, who helps manage the equivalent of $128 million in assets at Taurus Asset Management Ltd. in New Delhi. "I don't think this level can be sustained for long."
Finance Minister Pranab Mukherjee this week pledged to boost spending in July's budget, with growth at almost half the pace in the past five years. The economy is already showing "some signs" of revival from interest-rate cuts and fiscal stimulus worth 7 percent of GDP, Mukherjee said.
Sun Pharmaceutical Industries Ltd. lost 8.1 percent to 1,213.75, after its U.S. unit, Caraco Pharmaceuticals Laboratories Ltd., reported lower-than-expected revenue, said Nitin Agarwal, an analyst who tracks the stock at SSKI Securities Pvt. in Mumbai. He rates Sun Pharma, India's biggest drugmaker by market value, "outperform."
To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
May 29 (Bloomberg) -- Indian stocks rose, capping their best month in 17 years, after a government report showed faster- than-expected economic growth last quarter. The rupee rallied.
DLF Ltd., the nation's largest developer, jumped 9 percent and Larsen & Toubro Ltd., the biggest engineering company, added more than 4 percent. Gross domestic product expanded 5.8 percent in the three months to March 31, beating the 5 percent median economist forecast in a Bloomberg News survey.
"There is reason to be optimistic for investors as this can be taken to mean the economy is on a rising growth path," said Murthy Nagarajan, who manages the equivalent of $181 million in Indian assets at Mirae Asset Global Investment in Mumbai.
The Bombay Stock Exchange's Sensitive Index, or Sensex, added 329.24, or 2.3 percent, to 14,625.25. The S&P CNX Nifty Index on the National Stock Exchange added 2.6 percent to 4,448.95. The BSE 200 Index increased 2.3 percent to 1,772.82.
The rupee advanced 0.8 percent to 47.23, the biggest gain since May 18. The rupee gained 6 percent in May, the most since 1973, according to Bloomberg data.
Overseas investors have bought $3.7 billion of more local equities than they sold this year. Inflows accelerated on speculation the Congress government, with almost twice as many seats as the main opposition, may reduce barriers to foreign investment in insurers and retailers, plans that had been blocked by its former communist allies.
Election Rally
The Sensex has surged 28 percent in May, its biggest monthly gain since March 1992, when the index climbed 51 percent. Gains were boosted by a 17 percent rally on May 18, the first day of trading after the ruling Congress party's biggest election victory in two decades.
DLF jumped 9 percent to 406.50, the highest since Sept. 22. Larsen & Toubro rose 4.2 percent to 1,402.20, the highest in more than nine months.
Mahindra & Mahindra Ltd., the nation's largest maker of sport-utility vehicles, gained 5 percent to 668.90. The company reported during late trading yesterday a better-than-estimated 89 percent surge in fourth-quarter profit.
State-owned Indian Oil Corp. led gains by refiners after Oil Minister Murli Deora said he will seek Cabinet approval to free fuel prices from government control.
"The government has taken notice and is working on" a proposal, said Deora, who was re-appointed oil minister yesterday. "We will take it up to the Cabinet in six weeks."
Indian Oil, the biggest state-run refiner, gained 6.8 percent to 609 rupees. Bharat Petroleum Corp., the second- biggest, climbed 3.7 percent to 464.70 rupees, while Hindustan Petroleum Corp. added 8.4 percent to 362.95 rupees.
Earnings Concerns
The Sensex index may extend its election rally by another 5 percent before slumping on earnings concerns, Kotak Securities Ltd. said yesterday. Shares in the Sensex trade at an average 14.9 times future earnings, up from their 2009 low of 8.83 on March 11, according to data compiled by Bloomberg.
"The markets are highly overvalued at the current levels," said R.K. Gupta, who helps manage the equivalent of $128 million in assets at Taurus Asset Management Ltd. in New Delhi. "I don't think this level can be sustained for long."
Finance Minister Pranab Mukherjee this week pledged to boost spending in July's budget, with growth at almost half the pace in the past five years. The economy is already showing "some signs" of revival from interest-rate cuts and fiscal stimulus worth 7 percent of GDP, Mukherjee said.
Sun Pharmaceutical Industries Ltd. lost 8.1 percent to 1,213.75, after its U.S. unit, Caraco Pharmaceuticals Laboratories Ltd., reported lower-than-expected revenue, said Nitin Agarwal, an analyst who tracks the stock at SSKI Securities Pvt. in Mumbai. He rates Sun Pharma, India's biggest drugmaker by market value, "outperform."
To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
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