Sept. 29 (Bloomberg) -- Indian stocks climbed, tracking a rebound in Asian equities, on optimism German lawmakers will approve the expansion of a bailout fund for Europe’s debt- stricken nations, and as a top government official said the South Asian economy may “turn around soon.”
Infosys Ltd. rallied 3.3 percent, pacing advances among software services exporters on speculation a decline in the rupee will make them more competitive. India is a “haven of relative safety,” Kaushik Basu, chief economic adviser in the finance ministry, said today. ITC Ltd., Asia’s second-largest cigarette maker by market value, advanced 2.7 percent.
“We have seen a substantial sell-off and this is the time for investors to pick stocks,” Gurunath Mudlapur, managing director at Atherstone Capital Markets Ltd. in Mumbai, said by phone. “Markets are tired of getting negative news.”
The BSE India Sensitive Index, or Sensex, jumped 252.05 points, or 1.5 percent, to 16,698.07 at the 3:30 p.m. close in Mumbai, its highest level since Sept. 21. The measure’s gain outweighed speculation the central bank may increase borrowing costs further after food inflation accelerated for the first time in four weeks.
The MSCI Asia Pacific Index reversed losses of as much as 1.3 percent, gaining 0.4 percent to 114.27. The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. advanced 1.4 percent to 5,015.45, while its October futures traded at 5,036. The BSE 200-Index added 1.1 percent to 2,054.98.
German lawmakers backed an enhanced euro-area rescue fund minutes after Indian markets closed as European officials turn to look at what next steps may be needed to stem the region’s debt crisis.
The Sensex has declined 19 percent this year on concern the European crisis, slowing U.S. growth and the Reserve Bank of India’s record series of rate increases will crimp company earnings. The measure has retreated 11 percent this quarter, set for its steepest loss since the three months ended December 2008. Sensex companies trade at 14.1 times future profits, compared with 9.5 times on the MSCI Emerging Markets Index.
Overseas funds turned net sellers of Indian equities on Sept. 26, according to data from the market regulator. They withdrew a net $2.4 billion from local stocks in August, the biggest outflow since October 2008.
The Reserve Bank has increased borrowing costs by a total of 350 basis points starting mid-March 2010 to tame the fastest inflation among the so-called BRICS economies.
Governor Duvvuri Subbarao last raised rates by 25 basis points to 8.25 percent on Sept. 16 as wholesale-price inflation reached a 13-month high of 9.78 percent in August, staying above 9 percent for a ninth straight month.
An index measuring wholesale prices of farm products rose 9.13 percent in the week ended Sept. 17 from a year ago, the trade ministry said today. The gauge climbed 8.84 percent the previous week.
Concern over a possible Greek default is dragging global stocks toward the biggest quarterly loss since 2008. Global investors anticipate Europe’s debt crisis leading to an economic slump, a financial meltdown and social unrest in the next year, with 72 percent predicting a country abandoning the euro as a currency within five years, a Bloomberg survey found.
“There is a risk-aversion trade going on globally,” Mohit Mirchandani, head of investments, portfolio management services at Religare Asset Management Co., said by phone from Mumbai. “As long as the global uncertainty remains, there is likely to be a flight of capital from riskier assets, including emerging- market equities.”
Infosys, the second-largest software services provider, rallied 3.3 percent to 2,551.10 rupees, the highest since Aug. 5. Tata Consultancy Services Ltd., the largest, gained 1.3 percent to 1,061.45 rupees. India’s rupee weakened 0.4 percent to 48.93 per dollar as of 4:24 p.m. in Mumbai.
The currency completed its worst week in 18 years on Sept. 23, losing 4.6 percent. A weaker rupee boosts earnings of top Indian software exporters such as Infosys and TCS, which get about three-quarters of their revenue from overseas, mostly the U.S. and Europe.
ITC climbed 2.6 percent to 202.25 rupees, the highest since Sept. 6. The company bought a 26 percent stake in a 275-room, five-star luxury hotel property being developed by Noida-based Logix Group, Economic Times reported today, citing a person it didn’t identify.
HDFC Bank Ltd., India’s second-largest private lender, advanced 2.8 percent to 470.60 rupees, the most since Sept. 7, while ICICI Bank Ltd., the largest private lender, advanced 2.5 percent to 890.70 rupees. Jaiprakash Associates Ltd., a builder of dams, surged 6.8 percent to 74.75 rupees, its highest close since July 26.
Foreign funds bought a net 887 million rupees ($18 million) of stocks on Sept. 27, paring their outflow from local stocks this year to 5.44 billion rupees, according to data from the market regulator.
--With assistance from Santanu Chakraborty in Mumbai. Editor: Ravil Shirodkar
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