Indian Stocks Advance to Two-Year High; Maruti Jumps on Earnings
By Rajhkumar K Shaaw - Jan 25, 2013
Indian (SENSEX) stocks rallied to a two-year high, erasing a weekly loss, as carmakers and lenders increased ahead of the central bank policy meeting next week.
The BSE India Sensitive Index, or Sensex, rose 0.9 percent to 20,103.53 at the close. The gauge climbed 0.3 percent this week. Maruti Suzuki India Ltd. (MSIL), the biggest carmaker, surged to a three-year high after third-quarter profit exceeded analysts’estimates. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, jumped 2.6 percent, ending a five day, 11-percent drop. State Bank of India Ltd., the nation’s biggest lender, increased 2.2 percent, the most since Dec. 14.
Prime Minister Manmohan Singh’s administration took a step yesterday to spur inflows and avert a debt-rating downgrade by increasing a limit on foreign investment in rupee bonds by $10 billion to $75 billion. The Reserve Bank of India will cut the benchmark rate by 25 basis points to 7.75 percent on Jan. 29, according to 15 of 18 analysts surveyed by Bloomberg. Two analysts forecast a 50 basis-point cut.
“We would be happy if the central bank is slow in cutting interest rates as India is still prone to inflationary risks,”Gary Dugan, chief investment officer for Asia and Middle East at Royal Bank of Scotland Group Plc’s wealth management unit, told Bloomberg TV India today. “We would be comfortable” with a 25 basis point rate cut by the RBI next week.
Consumer-price inflation accelerated to 10.56 percent in December, the second-highest level among the Group of 20 major economies, data compiled by Bloomberg show. Core inflation eased to 4.19 percent from 4.49 percent in November, according to calculations by Bloomberg. The RBI has left its benchmark rate at 8 percent since a 50 basis-point cut in April 2012.
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