Sensex Index Advances

Indian Stocks Gain as GDP Growth Quickens, Dubai Concern Eases

Nov. 30 (Bloomberg) -- India's benchmark stock index rose, snapping a two-day 3.3 percent decline, as the nation's economy grew at the fastest pace in 1 1/2 years last quarter, beating economists' estimates.

Larsen & Toubro Ltd., India's biggest engineering company, gained 1.9 percent. ICICI Bank Ltd., India's second-largest lender, climbed 2.6 percent. Stocks also rebounded as concerns of losses from Dubai World's possible default eased.

"GDP numbers could continue to surprise positively," said Kenneth Andrade, head of investments at IDFC Asset Management Co., who manages assets worth $5.5 billion in Mumbai. "Investors over-reacted to the problems in Dubai which are quite localized."

The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 296.91, or 1.8 percent, to 16,928.92 as of 11:57 a.m. local time, the most since Nov. 11. All 30 stocks in the measure advanced. The S&P CNX Nifty Index on the National Stock Exchange rose 1.9 percent to 5,036.2. The BSE 200 Index added 1.9 percent to 2,107.58.

The United Arab Emirates pledged support for its banks, easing concerns that losses from Dubai World will spread. Central Bank of the U.A.E. said lenders will be able to borrow money for half a percentage point above the three-month local benchmark interest rate.

India's economy expanded by 7.9 percent last quarter from a year earlier, exceeding all estimates in a Bloomberg News survey of 22 economists, where the median forecast was for a 6.3 percent gain.

'Positive Surprise'

"It's definitely a positive surprise," said Navneet Munot, who oversees about $8.2 billion of assets as chief investment officer at SBI Asset Management Co. in Mumbai. "India's growth rate is more significant in comparison with the rest of the world and investors are able to see this differentiation."

ICICI added 2.6 percent to 873.05 rupees. Larsen gained 1.9 percent to 1,620 rupees. Larsen has formed a venture with Nuclear Power Corp. of India Ltd. to build a forging plant at Hazira, the companies said in a joint statement today. Reliance Industries Ltd., the nation's most valuable company, advanced 2 percent to 1,066.80 rupees.

Tata Motors Ltd., the Indian truckmaker that owns Jaguar Land Rover, gained 3.6 percent to 651.85 rupees after it turned to a profit in the second-quarter and Citigroup Inc. raised the stock's rating to "buy" from "hold," citing the earnings outlook.

Indiabulls Real Estate Ltd. rose 3.5 percent to 208.70 rupees after it was upgraded to "buy" from "sell" at Citigroup Inc., which said concerns on leasing delays and the company's "low execution visibility" are factored into the stock's valuation.

Wockhardt Ltd., an Indian drugmaker, rose 6.6 percent to 182.80 rupees. Wockhardt and DBS Bank Ltd. reached an out-of- court settlement over repayment of a 440 million rupee ($9.5 million) loan, Mint newspaper reported, citing a person familiar with the development. N. S. Rajan, a Wockhardt spokesman, declined to comment on the report when contacted by telephone today.

To contact the reporter on this story: Pooja Thakur at pthakur@bloomberg.net