Traders at the Bombay Stock Exchange. The Sensex yesterday jumped 1.3% to 27,687.30 points.

Bloomberg/Mumbai


Indian stocks climbed to a three-week high, with the benchmark index extending last week’s advance, after a report on the monsoon’s progress bolstered expectations of a reduction in borrowing costs. The rupee fell 0.1% to 63.55575 a dollar as of 12:10 pm in Mumbai.
Tata Power Co, the biggest non-state generator, advanced to a two-week high, while Bajaj Auto increased for a third day. Hindalco Industries, India’s second-largest aluminium producer, rose to a one-week high. Indian Oil Corp paced gains among refiners after raising fuel prices. Gail India was the best performer on the S&P BSE Sensex.
The Sensex jumped 1.3% to 27,687.30, the highest close since April 23. The weather bureau forecast on Sunday that the monsoon may set in over the southern state of Kerala on May 30, six days sooner than last year. The gauge capped a second weekly advance on Friday amid speculation that slowing inflation will give Reserve Bank of India Governor Raghuram Rajan room to reduce interest rates for a third time in 2015.
“If the monsoon is normal, then the chances of a rate cut increase,” UR Bhat, a director at a local unit of UK-based Dalton Strategic Partnership LLP, which oversees $2bn in assets, said in a phone interview. “There’s a good chance the RBI will cut interest rates with inflation falling.” The 50-stock CNX Nifty index rose 1.4% to 8,373.65, and the benchmark gauge of option prices slumped the most since February 28 to 17.9.
While eight of the 14 Sensex companies that have reported results for the March quarter have beaten or matched estimates, profits will decline for a second straight quarter, forecasts compiled by Bloomberg show.
“The results season hasn’t produced big disappointments so far,” Taher Badshah, co-head of equities at Mumbai-based Motilal Oswal Asset Management Co, which has $330mn in assets, said in an interview with Bloomberg TV India yesterday. “The market’s taking heart in the fact that earnings, despite the challenges around, are not weakening as much as expected.” Gail rallied 3.8% to its highest level since April 16. Hindalco climbed 1.5% and Bajaj Auto increased 1.6%, extending last week’s 3% advance. Drugmaker Dr Reddy’s Laboratories climbed 3.6%, the most since April 6.
Oil & Natural Gas Corp, the largest explorer, increased to a two-week high. Indian Oil climbed 2%, the most since April 30. Hindustan Petroleum Corp rallied 4.1% and Bharat Petroleum Corp increased 3.4%.