Indian Stocks Rise a Fourth Day; Reliance, ICICI Lead Gains
Reliance, India's most valuable company, increased for the second day. Lenders ICICI Bank Ltd. and HDFC Bank Ltd. climbed before their earnings tomorrow. Tractor maker Escorts Ltd. soared to a 10-year high after profit jumped more than fivefold.
"Even in the downturn, the earnings of Indian companies were much more resilient," said Gopal Agrawal, head of equities at Mirae Asset Financial Group's local office, which has $2.5 billion invested in India. "Foreign investors are positive on India. Globally, the profitability of Indian companies is quite good. Anyone looking for good returns will allocate to India."
The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 120.21, or 0.7 percent, to 17,694.2. The gauge advanced 0.6 percent this week, rebounding from a 1.9 percent decline last week.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.7 percent to 5,304.1. The BSE 200 Index increased 0.4 percent to 2,232.81.
Reliance rose 1.2 percent to 1,088.2 rupees. The Mumbai- based company controlled by Mukesh Ambani, Asia's richest man, may report net income of 51.4 billion rupees in the three months ended March 31, according to the mean estimate of 14 analysts surveyed by Bloomberg News. That compares with profit of 35.5 billion rupees a year earlier.
Gas Output
"Everyone in the market expects Reliance to boost profits because of higher gas output," said Apurva Shah, the Mumbai- based head of research at Prabhudas Lilladher Pvt. "Refining profits are also recovering."
Reliance increased output from India's biggest gas field, which started operating in April last year, as accelerating economic growth spurred demand from power and fertilizer producers.
ICICI Bank, the biggest non-state lender, was the biggest gainer on the Sensex today. The stock rose 3.6 percent to 977.7 rupees. HDFC Bank, the second biggest non-state lender by market value, gained 0.9 percent to 1,951.8 rupees.
India equity investors should buy private banks and shift focus to individual stocks as "most of the easy money has been made," according to Mirae's Agrawal said.
Working Capital
"Indian companies are likely to borrow more to increase their capacities and meet working capital requirements as commodities prices are rising," said Agrawal, whose Mirae Asset India Opportunities Fund beat 94 percent of 446 growth equity funds focused on India over the past year, according to data compiled by Bloomberg.
Escorts, the maker of tractors and farm equipment, advanced 3.3 percent to 180.35 rupees after its net income surged more than fivefold to 414.7 million rupees in the second quarter from 78.2 million a year earlier. The stock closed at its highest level since February 2000.
Rallis India Ltd., an agrochemicals company, advanced 0.8 percent to 1,428.05 rupees after its profit jumped 42 percent to 1.02 billion rupees in the quarter ended March 31.
Overseas investors bought a net 2.65 billion rupees ($59.6 million) of Indian stocks yesterday, taking their total purchases of the equities this year to 258.9 billion rupees, according to the nation's market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years earlier in domestic currency terms, as the biggest rally in 18 years lured foreign funds. 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:
ACC Ltd. (ACC IN) sank 1.7 percent to 903.7 rupees. The nation's biggest cement maker was downgraded to "underperform" from "neutral" at Macquarie Research by equity analyst Rakesh Arora. The 12-month target price is 771 rupees per share.
Mahindra & Mahindra Ltd. (MM IN) climbed 2.5 percent to 521.1 rupees. India's largest maker of sport-utility vehicles reduced prices for its Logan car by as much as 80,000 rupees ($1,796) effective April 26, to boost sales, according to a statement issued in Mumbai yesterday.
Nestle India Ltd. (NEST IN) dropped 4.7 percent to 2,722.1 rupees. The unit of the world's biggest food company fell as rising costs crimped profit. "Profit has been a big disappointment although their revenue is in line," said Shirish Pardeshi, a Mumbai-based analyst at Anand Rathi Financial Services Ltd., who recommends investors sell the shares. "Historically, the first quarter is the biggest for Nestle."
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.
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