Indian stocks surged the most in a week amid optimism the government will announce measures to boost growth and as a rally in European shares eased concerns.
Bajaj Auto Ltd. (BJAUT), the second-largest motorcycle maker, rose the most since January after its earnings. Larsen & Toubro Ltd. (LT), the biggest engineering company, advanced for the first time in five days. The BSE India Sensitive Index (SENSEX) added 0.5 percent to 17,185.09, according to preliminary closing prices.
Mamata Banerjee, a mercurial ally of Prime Minister Manmohan Singh, yesterday abandoned her opposition to the ruling Congress party pick to be the country’s next president, ending weeks of resistance and fueling optimism the government will announce measures to boost growth. Lawmakers will vote tomorrow. European stocks rose for the third time in four days as minutes showed the Bank of England may reconsider the case for an interest-rate cut.
Singh, who took over the finance ministry last month, has pledged to revive growth after expansion slowed to 5.3 percent in the first quarter from a year earlier, the slowest pace in almost a decade. The Sensex has risen 11 percent this year, fueled partly by flows from overseas funds.
Foreign investors bought local shares for a 11th day on July 16, the longest stretch of net purchases since February, data from the regulator show. They have bought a net $9.9 billion of local stocks this year, the highest in Asia and a record for the period.
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