India’s stocks rose for the second day as a government official said the nation’s economy will expand at the fastest annual pace in three years.
Tata Steel Ltd., the nation’s biggest producer of the alloy, gained for the fourth day after RBS Equities （India） Ltd. said top producers may raise prices. Emerging economies can expand at a “reasonable pace” in the next four to five years even if growth in developed nations will be moderate, Montek Singh Ahluwalia, deputy chairman of the Planning Commission said today. Hindalco Industries Ltd., the biggest aluminum producer, climbed to its highest in 32 months.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, increased 72.20, or 0.4 percent, to 20,117.38, extending gains to the highest level since January 2008. The gauge has climbed 26 percent from its May 25 low and is set for its longest string of quarterly gains since at least 1979.
“The high GDP growth should continue for the next few years,” said Kaushik Dani, a Mumbai-based fund manager with Peerless Mutual Fund, which manages $322 million in assets. “It will boost corporate earnings, too. Clearly, foreign investors are willing to pay a premium to be a part of the India growth story.” Dani prefers shares of banking and financial companies that he declined to name.
Tata Steel, Hindalco
The S&P CNX Nifty Index on the National Stock Exchange rose 0.3 percent to 6,035.65. The BSE 200 Index advanced 0.4 percent to 2,542.11.
Tata Steel gained 2.5 percent to 645.9 rupees. The nation’s steel producers may raise prices by as much as 4 percent next month because of lower imports from China and a surge in rural demand, RBS Equities （India） Ltd. said. JSW Steel Ltd., India’s third-largest producer, added 3.8 percent to 1,319.9 rupees.
Hindalco soared 3 percent to 196.85 rupees, its best close since January 2008. Sterlite Industries （India） Ltd., the largest copper and zinc producer, added 3.1 percent to 177.85 rupees.
Reliance Industries Ltd., the most valuable company, climbed 0.9 percent to 1,010.2 rupees after the Mint newspaper reported that it plans to invest more than 400 billion rupees （$8.85 billion） to expand its refining complex. The company has set aside 160 billion rupees to build a cracker unit as part of the project, the Mint report said. Manoj Warrier, a spokesman for Reliance, couldn’t immediately be reached for comment.
Fund Flows
India’s economy is forecast to grow 8.5 percent this fiscal year, Montek Singh Ahluwalia, deputy chairman of the country’s Planning Commission said in a speech in Kuala Lumpur today, reiterating the pace predicted on Sept. 20 by the nation’s Finance Minister Pranab Mukherjee. That would be the fastest expansion since the year through March 2008.
“Investors with a three to five-year perspective will find Indian shares attractive,” said Avinash Gupta, an analyst at Bonanza Portfolio Ltd., a New Delhi-based brokerage. “Foreign investors will continue to buy more shares.” Gupta recommended shares of lenders, infrastructure companies and automakers, without naming any.
Foreign fund inflows to India’s equities have increased 55 percent this year, making the benchmark index the most expensive in Asia and among the BRIC markets that also include Brazil, Russia and China.
Overseas funds bought a net 5.83 billion rupees （$127.8 million） of Indian equities on Sept. 23, taking total investments in the stocks this year to 808.2 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 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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