Indian stocks climbed the most in about three weeks amid speculation the government may secure lawmakers’ support for its economic policies in the winter session of the nation’s parliament starting tomorrow.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.7 percent to 18,460.38 at the close, the steepest gain since Nov. 2. The gauge lost 2 percent last week. ITC Ltd. (ITC), Asia’s second-biggest tobacco company, advanced to near a two-week high, contributing the most to gains. ICICI Bank Ltd. (ICICIBC), the third-biggest lender by value, increased for a second day.
Prime Minister Manmohan Singh’s administration will try to push through India’s biggest opening to foreign investment in a decade in the parliament session from tomorrow through Dec. 20. Singh in September opened retailing and airlines to foreigners, pared fuel subsidies and cut a tax on companies’ overseas debt in a wave of policy making after two years of gridlock.
“The market will trudge along for a while until it gets a clear signal that policy action is moving forward,” Sangeeta Purushottam, an independent market analyst, told Bloomberg TV India today. “The parliament session will be watched carefully to see if the government is going to walk the talk.”
Singh introduced more reforms in October, including plans to boost foreign investment in insurance and pension sectors, which require support from his party’s coalition partners to win parliamentary approval. Opposition parties are threatening a no- confidence vote. The government is reaching out to parties to secure backing, Finance Minister Palaniappan Chidambaram told reporters on Nov. 16.
ICICI Bank gained 2 percent to 1,044.45 rupees, the most since Nov. 2. ITC added 2 percent to 286.1 rupees, the highest close since Nov. 9. Tata Consultancy Services Ltd. (TCS), the nation’s biggest software exporter, rose 0.7 percent to 1,282.2 rupees. Bharti Airtel Ltd. (BHARTI), the largest cell-phone operator, dropped 0.5 percent to 307.4 rupees.
“The government has the numbers to pass some of these reform measures,” Andrew Holland, chief executive officer of investment advisory at Ambit Capital in Mumbai, told Bloomberg TV India today. “The market will vote with its feet” if the proposals fail to get parliamentary approval, he said.
The Sensex has increased 19.5 percent this year, driven by foreign inflows and government policy reforms. The gauge is the best performer this year among global benchmark gauges with at least $1 trillion in market value, data compiled by Bloomberg.
Overseas funds bought a net $125 million of shares on Nov. 19, taking net purchases this year to $19 billion, the most among the 10 Asian markets tracked by Bloomberg, excluding China, data from the regulator show.
The Sensex trades at 15.1 times estimated earnings, compared with the MSCI Emerging Markets Index (MXEF)’s 11.3 times.
The S&P CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. increased 0.8 percent to 5,614.80. India VIX, which measures the cost of protection against declines in the Nifty index, fell 2.2 percent to 15.46, the lowest level since Nov. 20. Trading volume of Nifty-listed shares was 6 percent less than the 30-day average on Nov. 20.
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