India Stocks Jump Most in Three Weeks on Slowing Inflation
By Pooja Thakur
Dec. 4 (Bloomberg) -- India's benchmark stock index rose the most in three weeks, led by banks, after inflation unexpectedly fell to a seven-month low, giving the central bank room to reduce borrowing costs to spur growth.
ICICI Bank Ltd., India's second-largest lender, added 8.7 percent, its highest in three weeks. Reliance Industries Ltd. led manufacturers and industrial stocks higher after a report in the Economic Times said the government may unveil a 750 billion-rupee ($15 billion) plan to boost economic growth by the week's end.
``India needs a sentiment booster, we need some smart measures to boost the economy,'' said Sandip Sabharwal, chief investment officer at Mumbai-based J.M. Financial Mutual Fund, which manages assets worth $1.4 billion in equities and bonds. ``Any cut should be at least a 100 basis points, initially, to help boost growth.''
India's benchmark Bombay Stock Exchange Sensitive Index, or Sensex, added 482.32, or 5.5 percent, to 9,229.75, the most since Nov. 10. The S&P CNX Nifty Index on the National Stock Exchange rose 131.55, or 5 percent, to 2,788. The BSE 200 Index rose 4.8 percent to 1,081.54. Nifty for December delivery climbed 5.2 percent to 2,793.20.
ICICI jumped 8.7 percent to 364 rupees. State Bank of India added 6.5 percent to 1,168.90 rupees. HDFC Bank Ltd., the No. 3 lender, rose 3.6 percent to 911.95 rupees.
Wholesale prices rose 8.40 percent in the week to Nov. 22 from a year earlier, the commerce ministry said in New Delhi today. Economists were expecting an increase of 8.95 percent.
Repurchase Rate
Since October, the Reserve Bank of India has lowered its repurchase rate by 1.5 percentage points. It has also reduced the amount of deposits that lenders need to set aside as cash reserves and in government bonds by 3.5 percentage points and 1 percentage point respectively, to stimulate demand.
The Reserve Bank may reduce the repurchase rate by as much as 1.5 percentage points to 6 percent as part of a government spending plan to revitalize the economy, The Economic Times reported yesterday, citing a government official it didn't name.
Larsen & Toubro Ltd., India's biggest engineering company, rose 8.3 percent to 748.20 rupees, the most since Nov. 3. DLF Ltd., India's biggest real estate developer, jumped 11 percent to 213.45 rupees, the biggest advance since Nov. 4.
A stimulus package may include the use of up to $10 billion from the country's foreign exchange reserves to fund road- building, ports and other infrastructure projects, the paper said.
Reliance Advances
India's central bank will also extend refinance credit of 100 billion rupees to the Small Industries Development Board of India and the National Housing Bank, the paper reported.
Prime Minister Manmohan Singh held a meeting of top aides to discuss measures required to be taken to counter the economic slowdown, Singh's office said on Dec. 2. Based on his directions, a package of measures will be completed and announced by the end of the week, the government said.
Reliance jumped 8.4 percent to 1,159.10 rupees, the most since Oct. 31. India's biggest company by market value, has been asked by the government to supply natural gas to Ratnagiri Gas & Power Pvt. on priority to help ease electricity shortages in the western state of Maharashtra.
Overseas funds sold a net 3.2 billion rupees of Indian stocks on Dec. 2, increasing outflows from stocks this year to $13.5 billion, the nation's market regulator said.
The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Bharat Heavy Electricals Ltd. (BHEL IN) rose 88.85 rupees, or 7 percent, to 1,357.70. The country's biggest power-equipment maker said it won a contract that may be worth 20 billion rupees from Oman for supplying and setting up gas turbine generator packages.
Nava Bharat Ventures Ltd. (NBVL IN) jumped 20.55 rupees, or 21 percent, to 120, the most since Dec. 1999, after the company said it will consider a proposal to buy back shares on Dec. 12.
Tata Steel Ltd. (TATA IN) jumped 22.50 rupees, or 14 percent, to 187.20. India's biggest steelmaker said production of hot metal rose 27 percent in November from a year earlier. The company produced 578,000 metric tons of hot metal in November compared with 456,000 tons a year ago, the company said in an e- mailed statement today. Production of crude steel rose 23 percent to 514,000 tons, it said.
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