Sensex Index Rebounds

India's Stocks Rise, Snapping Five-Day Slide, on EU Rescue Plan

May 10 (Bloomberg) -- India's stocks rose, rebounding from the biggest weekly decline in six months, on speculation an emergency package to bail out debt-laden European countries will contain the region's credit crisis.

Reliance Industries Ltd., the nation's most valuable company, climbed to a two-week high. Tata Motors Ltd., the owner of Jaguar Land Rover Ltd., advanced for the first time in six days. The European Central Bank said it will intervene in bond markets in an effort to help stave off a sovereign-debt crisis.

"There is some relief among investors," said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. "The bailout package has given a lot of support to the financial markets." Mathews predicts banks, automotive and metals companies will lead gains today.

The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 447.95, or 2.7 percent, to 17,217.06 at 1:04 p.m. in Mumbai. The gauge declined 4.5 percent last week, its worst weekly performance in more than six months. The S&P CNX Nifty Index on the National Stock Exchange rose 2.9 percent to 5,163.40. The BSE 200 Index increased 2.5 percent to 2,180.47.

Reliance Industries advanced 4.1 percent to 1074.95 rupees. Tata Motors climbed 3.7 percent to 791.1 rupees.

India's Advantage

Governments of the 16 euro nations today agreed to lend as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank said it will counter "severe tensions" in "certain" markets by purchasing government and private debt. Concerns that the Greek financial crisis will spread wiped $3.7 trillion from the value of global stock markets last week.

"It takes away the initial investor concern that the European Union was doing nothing," said Andrew Holland, chief executive officer of equities at Ambit Capital Pvt. "Now they have done something we will see a relief rally."

Sterlite Industries (India) Ltd., the largest copper and zinc producer, rose 5.5 percent to 753.4 rupees. The stock declined 14 percent last week. Copper rose from the lowest level in 12 weeks. The price of copper for delivery in three months climbed as much as 1.9 percent on the London Metal Exchange.

Hindalco Industries Ltd., the biggest aluminum producer, jumped 6.7 percent to 173.9 rupees, paring last week's 8.7 percent decline. Aluminum prices in London climbed 1.3 percent.

Tata Steel

Tata Steel Ltd., the biggest producer of the alloy, soared 5.3 percent to 587.75 rupees.

India's $1.2 trillion economy is likely to expand 8.5 percent in the current fiscal year that started April 1, after a 7.2 percent gain in the previous year, Finance Minister Pranab Mukherjee said April 28.

Overseas investors sold a net 13.9 billion rupees ($309.6 million) of Indian equities on May 5, paring their total purchases of stocks this year to 290.2 billion rupees, according to the nation's market regulator.

Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years earlier in domestic currency terms, as the biggest rally in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.

The following were among the most active on the exchange:

Vijaya Bank Ltd. (VJYBK IN) gained 3 percent to 56.25 rupees. Four Indian state-run banks will probably get 15 billion rupees ($330 million) as part of their recapitalization, the Press Trust of India reported, citing unidentified people that it didn't identify. The government may give Vijaya Bank 7 billion rupees, while UCO Bank (UCO IN) may get 3 billion rupees. Central Bank of India (CBOI IN) and United Bank of India (UNTDB IN) may get 2.5 billion rupees each, the news agency said. No timeframe was given in the report.

Uco climbed 2.2 percent to 71.85 rupees. Central Bank rose 1.1 percent to 149 rupees, while United Bank advanced 1.6 percent to 80.9 rupees.

DCM Shriram Consolidated Ltd. (DCMS IN) increased 1.5 percent to 50.9 rupees. The producer of sugar, fertilizers, cement, chemicals and textiles will spend 800 million rupees in two years to develop a lignite mine in Rajasthan, the Press Trust of India reported, citing Chairman Ajay Shriram. The company will use the mine's output to replace coal as the fuel at its Kota power plant, according to the report. Shriram couldn't immediately be reached at his office for comment on the report.

LIC Housing Finance Ltd. (LICHF IN) jumped 3.3 percent to 940.35 rupees. The mortgage lender controlled by India's biggest life insurer is planning to enter the banking business, the Hindustan Times newspaper reported, citing Chief Executive Officer R.R. Nair.

Separately, the Economic Times reported LIC Housing is planning to raise 200 billion rupees. Nair wasn't immediately available to comment when called at his office.

MMTC Ltd. (MMTC IN) climbed 1.7 percent to 30,572 rupees. The state-run trading company expects sales will increase to 1 trillion rupees in three years, from 450 billion rupees now, the Hindu Business Line reported, citing Chairman Sanjiv Batra. He couldn't immediately be reached at his office telephone for comment on the report.

PVR Ltd. (PVRL IN) advanced 1.2 percent to 162 rupees. The movie operator plan to add 150 screens in the next two years, the Economic Times reported, citing Chairman Ajay Bijli. Bijli couldn't immediately be reached at his office telephone for comment on the report.

Torrent Power Ltd. (TPW IN) surged 3.4 percent to 319.3 rupees. The power generation and distribution company's fourth- quarter profit doubled to 2.9 billion rupees.

Triveni Engineering & Industries Ltd. (TRE IN) climbed 2.9 percent to 107 rupees. The maker of mechanical equipment said the company will list its Triveni Turbine unit on local exchanges by the end of 2010, the Press Trust of India reported, citing Chairman Dhruv Sawhney.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net