Bloomberg News

Indian Stocks Rise to Week High on Policy Speculation

June 28, 2012

India’s Stock Futures Advance on Government Policy Speculation

People monitor market news outside the Bombay Stock Exchange (BSE) building in Mumbai. The Sensex has fallen 2.5 percent since the end of March and is on course for its fifth quarterly decline in six. The gauge has slumped 7.9 percent from this year’s high on Feb. 21 on concern slowing economic growth will hurt corporate profits. Photographer: Adeel Halim/Bloomberg

Indian stocks rose to a one-week high on speculation Prime Minister Manmohan Singh will take steps to bolster investor confidence and as better-than- estimated U.S. data eased concerns over global economic growth.

Tata Consultancy Services Ltd. (TCS), the largest software exporter, rose for a third day. ITC Ltd. (ITC), the nation’s biggest tobacco company, rose to the highest in a week. The BSE India Sensitive Index (SENSEX), or Sensex, gained 0.1 percent to 16,990.76 at the close in Mumbai, the highest since June 21.

Singh, who took charge of the finance ministry two days ago, said the country needs to “reverse the climate of pessimism,” adding that the immediate emphasis of the government is to manage the balance of payments and boost institutional flows into India, according to comments on his Twitter Inc. account yesterday. Data yesterday showed U.S. durable-goods orders and the number of Americans signing contracts to buy existing homes rebounded in May.

“There are expectations that the prime minister may roll back some unpleasant measures taken earlier, which will boost confidence of domestic as well as foreign investors,” R.K. Gupta, the New Delhi-based managing director of Taurus Asset Management Ltd., which has $1 billion in assets, said by phone today. “The U.S. economy is showing signs of improvement, which is a positive sign for exporters, including software companies.”

Quarterly Decline

The Sensex has fallen 2.4 percent since the end of March and is on course for its fifth quarterly decline in six. The gauge has slumped 7.8 percent from this year’s high on Feb. 21 on concern slowing economic growth will hurt corporate profits. The Sensex trades at 13.3 times estimated profit, compared with the MSCI Emerging Markets Index’s 9.9 multiple.

Singh is grappling with an economy hobbled by a record trade deficit, a budget shortfall that has exceeded targets, corruption scandals and coalition in-fighting that has stymied his efforts to lure more foreign investment. The economy grew 5.3 percent in the quarter ended March, the least since 2003. Standard & Poor’s has warned it may cut India’s credit rating to so-called junk status.

Singh took control of the finance ministry after Pranab Mukherjee resigned from his post on June 26 to contest presidential polls. Singh, who will head the ministry until Mukherjee’s successor is named, was finance minister in the 1990s, sparking an economic turnaround that now faces one of its sternest tests.

U.S. Data

Tata Consultancy added 1 percent to 1,258.85 rupees, the highest close since June 19. ITC gained 1.4 percent to 251.3 rupees. ICICI Bank Ltd. (ICICIBC) added 0.5 percent to 856.95 rupees.

Rollovers in Nifty futures were at 52.37 percent yesterday, in line with the three-month average of 52.74 percent, according to a note today from Axis Securities & Sales Ltd., a unit of India’s third-largest private lender. June futures contracts expire today.

Bookings for U.S. goods meant to last at least three years rose 1.1 percent, the first increase since February, government data showed yesterday. Pending home sales climbed 5.9 percent after slumping 5.5 percent in April, according to data from the National Association of Realtors.

The U.S. accounted for 11 percent of the India’s exports in the six months to September 2011, data from the commerce ministry show. The European Union, which is trying to resolve a debt crisis that has dragged on the global economy, accounted for 17.2 percent of India’s shipments.

Overseas investors bought a net $15.1 million of Indian stocks on June 26, raising their investment this year to $8.6 billion rupees, according to the nation’s market regulator. They cut holdings by $273 million in May, a second month of net sales.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

People monitor market news outside the Bombay Stock Exchange (BSE) building in Mumbai. The Sensex has fallen 2.5 percent since the end of March and is on course for its fifth quarterly decline in six. The gauge has slumped 7.9 percent from this year’s high on Feb. 21 on concern slowing economic growth will hurt corporate profits. Photographer: Adeel Halim/Bloomberg June 19 (Bloomberg) -- Art Woo, director of Fitch Rating’s Asia-Pacific sovereign ratings group, talks about India's credit rating and the nation's economy. India’s sovereign-credit outlook was lowered to negative from stable by Fitch, which cited the heightened risk of deterioration in growth potential and limited progress on paring the nation’s budget deficit. Woo speaks with Mia Saini on Bloomberg Television's "Asia Edge." (Source: Bloomberg) April 18 (Bloomberg) -- Benjamin Pedley, head of investment strategy for North Asia at HSBC Private Bank, talks about the global economy, financial markets, and central banks' monetary policies. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television's "Asia Edge." (Source: Bloomberg)

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