Larsen & Toubro Ltd., the nation’s largest engineering company, climbed to a five-month high. ICICI Bank Ltd., the second-biggest lender, led other banks higher. Maruti Suzuki India Ltd., the nation’s biggest carmaker, sank 0.6 percent as a strike at a plant near New Delhi entered a ninth day.
The Bombay Stock Exchange Sensitive Index, or Sensex, gained 40.99, or 0.2 percent, to 18,307.02 at 12:29 p.m. in Mumbai, with twice as many stocks rising as falling. The MSCI Asia Pacific Index climbed 1.1 percent after a Chinese industrial production report exceeded economists’ forecasts, raising optimism that the world’s second-largest economy is growing amid government measures to curb inflation.
“Markets are taking comfort from Asian markets today,” said Kislay Kanth, head of research at Mape Securities Pvt. in Mumbai. “There’s some value buying too.”
The Sensex pared a 0.6 percent increase after the government reported that its wholesale-price index rose 9.06 percent from a year earlier after an 8.66 percent jump in April. The median estimate of 22 economists in a Bloomberg News survey was for an 8.74 percent increase.
The Indian economy may be “overheating” and further rate rises are warranted, Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC said yesterday, as well as calling for similar action in China. The Reserve Bank of India may boost borrowing costs on June 16 for the 10th time since mid-March 2010, 15 of 17 economists in a Bloomberg survey said.
The S&P CNX Nifty Index on the National Stock Exchange rose 0.3 percent to 5,499.55, after climbing as much as 0.7 percent. The BSE 200 Index gained 0.3 percent.
Larsen, ICICI
Larsen climbed 1.2 percent to 1,727.85 rupees, set for its highest close since Jan. 13. ICICI Bank added 1 percent to 1,050 rupees and its June futures traded at 1,054.65 rupees. Larger rival State Bank of India increased 0.8 percent to 2,238.1 rupees.
The Sensex has lost 11 percent this year, the most among benchmark Asian gauges tracked by Bloomberg, amid concern higher borrowing costs will crimp earnings. Stocks on the stock index are valued at an average of 14.8 times estimated profit, down from 21.5 times in March 2010, last year’s high. The MSCI Emerging Markets Index trades at 10.9 times earnings.
“We’re bullish and see value at current levels with a nine to 12-month perspective,” Manoj Singla, managing director and co-head of research at Religare Capital Markets Ltd., said in Mumbai. He recommends DLF Ltd., India’s biggest developer, as the stock that may rebound.
DLF Rebound
DLF gained 1.4 percent to 232.3 rupees. The shares closed yesterday at the lowest level since May 27.
India must ease rules for foreign investment in retail and financial services, and loosen labor laws, to help accelerate economic growth to a 10 percent pace, the Organisation for Economic Cooperation and Development said.
Even as the South Asian nation’s policies have helped spur expansion to almost 9 percent, faster growth is needed to cut poverty, the Paris-based organization said in a report.
Asia’s third-largest economy grew 7.8 percent in the three months ended March 31, the slowest pace in five quarters, a government report showed May 31. The growth is still the fastest after China among major Asian economies.
Overseas investors sold a net 4.7 billion rupees ($105 million) of Indian stocks on June 10, paring their investment in the equities this year to 2.02 billion rupees, according to data on the website of the market regulator.
Maruti Suzuki dropped 0.5 percent to 1,219 rupees. The company lost output for a ninth working day as workers at its plant near New Delhi demanded recognition for union representation. The stoppage at the factory, which builds as many as 1,200 cars daily, is costing the Indian unit of Suzuki Motor Corp. $9 million a day, Chairman R.C. Bhargava said on June 8.
--With assistance from Santanu Chakraborty in Mumbai. Editors: Darren Boey, Richard Frost.To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net.
To contact the editors responsible for this story: Darren Boey at dboey@bloomberg.net
