Most Indian stocks advanced amid expectation the government will be able to push economic reforms even as a deadlock continued in parliament over allowing overseas retailers to set up shop here.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.2 percent to 18,538.38, according to preliminary closing prices. Three shares climbed for every two that fell on the 30-stock gauge. The gauge added 1.1 percent last week, ending two weeks of losses. Tata Steel Ltd. (TATA), the nation’s biggest producer, climbed the most in six weeks after cutting 900 jobs at its U.K. unit. Hindustan Unilever Ltd. (HUVR), the largest home-products maker, rose for the second day.
Prime Minister Manmohan Singh began a campaign in September to revive India’s economic growth from the weakest since 2009 and avoid a credit-rating downgrade by paring fuel subsidies and opening up retailing and aviation to foreign investment. Both houses of parliament were adjourned today after the government and the main opposition failed to reach an agreement over investment policies.
The “reforms momentum has slowed, and this time I won’t blame the government but the opposition,” Samir Arora, founder of Singapore-based hedge fund Helios Capital Management Pte., which focuses its investments on India, told Bloomberg TV India today. “These are the crucial two-three months leading up to the Union budget. What happens in the parliament is important.”
The government will present its annual budget at the end of February.
The biggest overhaul of government policy in a decade and increased foreign inflows to Indian equities have driven the Sensex up by 20 percent this year. The measure trades at 15.2 times estimated profit, compared with the MSCI Emerging Markets Index’s (MXEF) 11.4 times, data compiled by Bloomberg show.
The Sensex will probably climb to a record 23,069 by the end of next year, helped by an expansion in earnings, global liquidity and attractive valuations, Morgan Stanley analysts led by Ridham Desai wrote in a report dated today.
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