India's Sensex Index Advances, Led by Mahindra, Reliance Infra

India's stocks advanced for a second day as investors speculated companies will benefit from accelerating economic growth and concern eased that the European debt crisis will derail a global recovery.

Mahindra & Mahindra Ltd., a sport-utility vehicle and tractor maker, rose to the highest in two months. Reliance Infrastructure Ltd., the nation's third-largest utility, advanced for a second day this week. Capital flows to India are gaining momentum, central bank Deputy Governor Subir Gokarn said today in Mumbai.

"Confidence is building up," said Kishor Ostwal, managing director of CNI Research (India) Ltd., a publicly traded equities research provider in Mumbai. "Risk in Indian markets is very nominal as domestic consumption is gaining pace, helped by the government's growth agenda." Ostwal advises investors to buy shares in TIL Ltd., a construction machinery maker, and IFCI Ltd., a financier.

The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 70.06, or 0.4 percent, to 17,265.87. The S&P CNX Nifty Index on the National Stock Exchange rose 0.4 percent to 5,178.90. The BSE 200 Index increased 0.7 percent to 2,191.20.

Mahindra climbed 3.4 percent to 566.7 rupees, its highest since March 16. Reliance Infrastructure added 3 percent to 1,027.55 rupees. Jaiprakash Associates Ltd., India's biggest builder of dams, increased 1.9 percent to 133.4 rupees.

Sales Growth

TIL surged 5.5 percent to 449.05 rupees, its highest close in more than two years. The company yesterday said it expects sales to grow at least 35 percent this year as the government increases infrastructure spending.

Asia's third-largest economy needs to spend $1 trillion on roads, ports, power and other infrastructure between 2012 and 2017 to help accelerate economic growth to 10 percent and cut poverty, Prime Minister Manmohan Singh said March 23. Spending planned for the five years to 2017 is more than double the amount in the previous five-year period, according to the Planning Commission.

India's $1.2 trillion economy is likely to expand 8.5 percent in the 12 months that started April 1, after a 7.2 percent gain in the previous year, Finance Minister Pranab Mukherjee said April 28.

Factory output grew at more than 10 percent for a sixth month, a government report yesterday showed. Output at factories, utilities and mines rose 13.5 percent in March from a year earlier after gaining 15.1 percent in February, the statistics department said in a statement yesterday.

Fixing Budgets

Stocks rallied across Asia as concerns about European deficits waned. Two days after other European governments told them to fix their budgets in return for a $1 trillion backstop, Spain yesterday announced the biggest round of budget reductions in 30 years and Portugal announced additional cuts.

Overseas investors bought a net 1.48 billion rupees ($32.9 million) of Indian equities on May 11, increasing their total purchases of the stocks this year to 278.2 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:

Bajaj Holdings and Investment Ltd. (BJHI IN), created by splitting from Bajaj Auto Ltd., jumped 8.1 percent to 706.8 rupees, its highest close in two years. Quarterly net income climbed to 611 million rupees from 216 million rupees a year earlier.

Elecon Engineering Co. (ELCN IN), a maker of conveyors and cranes, rose 4.6 percent to 81.65 rupees, the highest in a month. The company won orders worth 2.09 billion rupees for material handling equipment, according to its stock exchange filing.

Godrej Consumer Products Ltd. (GCPL IN), the country's second-biggest soapmaker, soared 14 percent to a record 338.85 rupees. Sara Lee Corp. agreed to sell its stake in their venture for 185 million euros ($234 million).

Great Eastern Shipping Co. (GESCO IN), India's second- biggest shipping company, gained 4.6 percent to 312.55 rupees. A unit filed a prospectus with the Securities & Exchange Board of India for an initial share sale, the company said in a regulatory filing.

Mangalore Refinery & Petrochemicals Ltd. (MRPL IN), a unit of India's biggest energy exploration company, lost 1.7 percent to 73.40 rupees after reporting a 58 percent drop in quarterly profit from a year earlier.

Mediaone Global Entertainment Ltd. (MONE IN): The television and film producer and distributor slid 4.9 percent to 84.60 rupees after deferring a bonus share-issue proposal.

Mundra Port & Special Economic Zone Ltd. (MSEZ IN), India's largest non-state cargo terminal, rose 2.9 percent to 744.2 rupees. The company said its board will meet on May 17 to consider a proposal to split its stock.

Nitesh Estates Ltd. (NITE IN), a builder of homes, hotels, office and retail commercial space, lost 4.8 percent to 51.40 rupees. That's lower that the 54 rupees that it sold shares for in an initial public offering.

Strides Arcolab Ltd. (STR IN), a drugmaker, rose 3.1 percent to 343.30 rupees. The company got approval from the U.S. Food and Drug Administration to sell its Vecuronium Bromide injection.

To contact the reporter on this story: Hemal Savai in Mumbai at at hsavai@bloomberg.net.

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