Indian Stocks Climb for Second Day; Hindalco, Oil & Natural Lead

India's benchmark stock index rose for a second day, paring a weekly decline, amid an advance in Asian equities after leaders of the Group of Eight said the global economy is gaining strength.

Hindalco Industries Ltd., the nation's largest aluminum maker, rallied the most in 12 months after its North American unit Novelis returned to profit. The MSCI Asia Pacific Index climbed 0.6 percent, set for its biggest two-day rally since April 21. Oil & Natural Gas Corp., India's largest energy explorer, extended yesterday's gains, climbing 3.1 percent. India may raise diesel prices, a government official said yesterday, a move that could cut ONGC's share of the fuel subsidy paid to state-run refiners.

The Bombay Stock Exchange Sensitive Index gained 221.46, or 1.2 percent, to 18,266.10 at the 3:30 p.m. close in Mumbai, its biggest gain in three weeks. The S&P CNX Nifty Index on the National Stock Exchange of India Ltd. added 1.2 percent to 5,476.10. Its June futures traded at 5,472. The BSE 200 Index rose 1.3 percent to 2,259.54.

"Valuations for a lot of stocks have come down to attractive levels," said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. He recommends shares of lenders including State Bank of India, the nation's largest, and automakers.

The Sensex fell 0.3 percent during the week and has lost 11 percent this year on concern higher borrowing costs will hurt corporate earnings. Equities on the measure are valued at an average 14.7 times estimated profit, down from 21.5 times in March 2010, last year's high. The MSCI Emerging Markets Index trades at 11.1 times earnings.

Nifty ReboundThe Nifty slid 0.2 percent this week, ending a fifth week of losses.

"The recent decline has been sharp, which justifies a rebound," said Shrikant Chouhan, senior vice-president of technical research at Kotak Securities Ltd. "We expect the Nifty to stage a pullback till 5,500."Asian stocks advanced today, paring the benchmark index's fourth weekly loss. The strengthening global economy will pave the way to cuts in debt built up in the recession, G-8 leaders holding a two-day summit that ends today in Deauville, France, said in a draft statement.

Hindalco rallied 5.9 percent to 197.55 rupees, the highest close in two weeks. Atlanta-based Novelis, which makes aluminum cans for Coca-Cola Co., reported a net income of $50 million in the quarter ended March 31, compared with a $1 million loss a year earlier, according to a statement yesterday.

Fuel SubsidyONGC climbed 3.1 percent to 282.95 rupees, its highest close since May 16. The government may increase diesel prices to support state refiners facing revenue losses of 2 trillion rupees this fiscal year, the official said, asking not to be identified before an official announcement.

Indian refiners sell diesel, kerosene and cooking gas at prices set by the government to curb inflation. They are partly compensated by getting discounts on crude supplies from ONGC and cash from the government.

Reliance Industries Ltd., India's largest company by market value, rose 1.2 percent to 945.45 rupees, a two-week high. D.E. Shaw & Co., the $20 billion hedge fund, may partner with the Mukesh Ambani-run company to offer investment banking, derivatives trading and alternate-asset management in India next year, Louis Salkind, managing director at D.E. Shaw, said in an interview in Mumbai yesterday.

Bharti Airtel Ltd., India's largest mobile-phone operator, rose 1.5 percent to 372.90 rupees after it was rated "marketperform" in new coverage at First Global Securities.

'Hammered Down'

Reliance Communications Ltd., the second-largest mobile- phone operator, rallied 6.1 percent to 85.05 rupees, the steepest climb since March 9. The company, owned by Indian billionaire Anil Ambani, took the final tranche of $266 million from China Development Bank's $1.93 billion loan facility, according to a statement on the Bombay Stock Exchange today.

Reliance Infrastructure Ltd., another Anil Ambani-run company, jumped 4.2 percent to 558.9 rupees. Shares of the two companies are the worst performers on the Sensex this year.

"Investors have covered short positions in a lot of counters today and picked up stocks that were hammered down," said Sunil Pachisia, vice-president at brokerage Pratibhuti Viniyog Ltd.

Tata Motors Ltd., the biggest truck-maker, tumbled 6.3 percent to 1,088.85 rupees, the lowest close in three months as earnings from its Indian operations declined.

CLSA Ltd. downgraded the stock to "outperform" from "buy" and cut the price target to 1,320 rupees a share from 1,500 rupees.

Overseas funds sold a net 4.2 billion rupees ($92.4 million) of Indian equities on May 25, taking their total outflows from equities in 2011 to 35 billion rupees, according to data on the website of the market regulator.