India’s Sensex Climbs to 34-Month High on GDP Growth Outlook
By Hemal Savai
Sept. 17 (Bloomberg) -- India’s benchmark stock index had its steepest weekly gain in 10 months as investors judged economic growth is robust enough to withstand higher borrowing costs.
DLF Ltd., the nation’s biggest real estate developer, advanced to its highest level since January. Tata Consultancy Services Ltd., the largest software-services exporter, rose after Research In Motion Ltd. and Oracle Corp. reported better- than-estimated profits, boosting the outlook for the industry. India’s central bank raised interest rates for a fifth time this year yesterday, saying economic growth remains “steady.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 177.26, or 0.9 percent, to 19,594.75. The gauge advanced 4.2 percent this week, to its highest level since January 2008. The S&P CNX Nifty Index on the National Stock Exchange rose 1 percent to 5,884.95. The BSE 200 Index advanced 1.1 percent to 2,494.48.
“Investors aren’t deterred because in an expanding economy, when you have a higher amount of disposable cash in your hand, a quarter basis-point hike in the interest rate isn’t going to make much of a difference,” said Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities Pvt., who manages about $550 million in equities. “Exporters will get higher sales as global economies recover, and that will offset any gains in the rupee.” Choksey said he’s been buying ICICI Bank Ltd. shares.
DLF, ICICI Bank
DLF increased 1.4 percent to 352.5 rupees. The stock has advanced 12 percent since Sept. 7, when it last declined. Hindalco Industries Ltd., India’s biggest aluminum producer, gained 1.6 percent to 189.05 rupees. ICICI Bank, the nation’s second-largest lender, rose 1 percent to 1,114.2 rupees, its highest level in more than 2 1/2 years.
India’s central bank yesterday raised borrowing costs for the fifth time this year, boosting the repurchase rate to 6 percent from 5.75 percent, and the reverse-repurchase rate to 5 percent from 4.5 percent. Gross domestic product grew 8.8 percent last quarter from a year earlier, the most among major economies after China and Brazil.
“The current level of monetary policy tightening may not be enough to slow demand growth significantly, as the still relatively low cost of capital could continue to fuel credit demand in the economy,” said Frederic Neumann, co-head of Asian economic research in Hong Kong at HSBC Holdings Plc.
Loans Climb
Loans to Indian companies have climbed 36 percent to 2.1 trillion rupees ($45 billion) this year, the most since Bloomberg started compiling the data in 2002. State Bank of India, the nation’s biggest, and ICICI Bank have raised their lending rates by 50 basis points since March, less than half the 1.25 percentage-point increase in the central bank’s benchmark repurchase rate.
Tata Consultancy climbed 2.1 percent to 913.8 rupees. Infosys Technologies Ltd., India’s second-largest software services provider, added 0.1 percent to 2,970.15 rupees. The companies get at least 90 percent of their sales abroad, and the shares fell yesterday amid concern gains in the rupee would reduce revenue in local currency terms.
Research In Motion, the Canadian maker of the BlackBerry smartphone, reported second-quarter revenue and profit that beat analysts’ estimates on rising demand for advanced phones that can surf the Web and manage e-mail. Oracle also beat estimates as sales of database software and Sun Microsystems server computers helped it capitalize on a recovery in information-technology spending.
Fund Flows
The rupee appreciated 0.6 percent to 45.890 per dollar. India’s currency has climbed 3.9 percent from an eight-month low in May as investors added to purchases of local stocks to benefit from the improving economy.
Overseas funds bought a net 23.6 billion rupees ($509 million) of Indian equities on Sept. 15, raising total investments in stocks this year to 706.8 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 ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
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