India's Stocks Climb to Two-Month High; Tata Motors Advances
By Rajhkumar K Shaaw
March 26 (Bloomberg) -- India's stocks rose, driving the benchmark index to its highest level in more than two months, as investors bet economic growth will be sustained even as the central bank withdraws stimulus measures.
Tata Motors Ltd., the owner of Jaguar Land Rover Ltd., climbed for the first time in four days. Maruti Suzuki India Ltd., the maker of half the cars sold in India, gained the most in more than three weeks, and Hindustan Unilever Ltd., the biggest household products maker, advanced to a two-week high.
"Rising interest rates are an acknowledgement of the strong economic growth in India," John Praveen, the Newark, New Jersey-based chief investment strategist at Prudential International, a unit of Prudential Financial Inc., which oversees $667 billion, said in an interview in the Mumbai bureau today. "This will not kill the rally."
The Bombay Stock Exchange's Sensitive Index, or Sensex, advanced 85.91, or 0.5 percent, to 17,644.76 in Mumbai, its highest since Jan. 6. The gauge climbed 0.4 percent this week, its seventh week of gains, the longest stretch since June.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.4 percent to 5,282. The BSE 200 Index increased 0.6 percent to 2,206.24.
Tata Motors increased 3.4 percent to 749.75 rupees, the most since March 2. Its Jaguar Land Rover unit will open five more dealerships in India in the year beginning April 1 as economic growth spurs demand for premium automobiles, the company said yesterday.
'Strong Demand'
Hindustan Unilever advanced 2.8 percent to 238.5 rupees. Maruti Suzuki rose 2 percent to 1,396.85 rupees, the biggest one-day gain since March 2. Mahindra & Mahindra Ltd., the largest maker of sport-utility vehicles and tractors, advanced 2.3 percent to 1,080.9 rupees, the highest since March 18.
Strengthening domestic spending will extend last year's rally in India's stocks, the biggest in 18 years, Praveen said. Automakers, household goods producers and infrastructure builders will lead gains, he said, without naming any companies.
"There is strong consumer demand in the Indian economy, which will lead to higher sales and profit for such companies and that will support the market," said Praveen, whose company operates under the brand name Pramerica in the nation.
The Reserve Bank of India will continue withdrawing economic stimulus measures to curb the pace of price increases, Reserve Bank of India Governor Duvvuri Subbarao said March 24. Policy makers unexpectedly raised interest rates after the benchmark wholesale inflation gauge rose to a 16-month high. The next central bank policy meeting is scheduled for April 20.
Foreign Buying
Overseas investors bought a net 4.86 billion rupees of Indian stocks on March 23, taking their total purchases of the equities this year to 166 billion rupees, according to the nation's market regulator.
Foreign fund inflows into India's stock market climbed to a record 834.2 billion rupees in 2009, beating the high set two years earlier in local currency terms, as the biggest rally in 18 years lured foreign investors. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
The following were among the most active on the exchange:
GVK Power & Infrastructure Ltd. (GVKP IN) gained 2.8 percent to 44.05 rupees. The builder of airports and power plants was rated new "buy" by Sandip Bansal, a Mumbai-based analyst at UBS AG.
Murli Industries Ltd. (MRLI IN) jumped 15 percent to 82.3 rupees. The paper maker will consider separating its cement, agriculture, paper and logistics business at a board meeting on April 8, the company said in a statement to the Bombay Stock Exchange.
Oil & Natural Gas Corp. (ONGC IN) advanced 2.2 percent to 1,079.9 rupees. The nation's biggest energy explorer approved spending 32.4 billion rupees to develop the first phase of the Cluster-7 fields off India's west coast, it said in an e-mailed statement.
Polaris Software Lab Ltd. (POL IN) advanced 3.7 percent to 177.75 rupees. The software services provider said it acquired IndigoTX, a software company.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.
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