Indian equities climbed the most in three weeks with global stocks after Greece

Bloomberg
Mumbai
Indian equities climbed the most in three weeks with global stocks after Greece reached an agreement with its creditors to remain in the euro.
GAIL India, a state-run supplier of natural gas, was the best performer on the S&P BSE Sensex. Sun Pharmaceutical Industries Ltd, India’s most valuable drugmaker, paced gains among its peers. Tata Consultancy Services, the largest software exporter, gained for the first time in five days, and Maruti Suzuki India advanced the most in six weeks.
The Sensex jumped 1.1% to 27,961.19 at the close in Mumbai. The Stoxx Europe 600 Index climbed 1.8%, and futures on the Standard & Poor’s 500 Index erased a decline to rise 0.8%. The Sensex fell 1.5% last week, ending three weeks of advances, amid fluctuations in Chinese stocks and uncertainty related to Greece.
“Greece was one of the biggest overhang on global markets and that has been taken care of,” Aneesh Srivastava, who manages $722mn as chief investment officer at IDBI Federal Life Insurance Co, said by phone.
After almost 17 hours of talks in Brussels, Greece and European leaders agreed on reforms needed to start talks for a third bailout in five years, European Union President Donald Tusk said on Twitter.
Back home, investors awaited the release of consumer inflation data later on Monday. Analysts surveyed by Bloomberg forecast retail inflation in June will climb to 5.10% compared with a rate of 5.01% in May.
Concern over price pressures has resurfaced as potentially deficient monsoon rains threaten to hurt crops and stoke food costs. The weather bureau predicts the June-September showers to be 88% of a 50-year average this year. While rains have been 2% below normal since June 1, Finance minister Arun Jaitley said Sunday the monsoon is likely to be better than last year.
“With good prospects for the monsoon, inflation is expected to come down,” DK Aggarwal, chairman of SMC Investments & Advisors Ltd, said by phone from New Delhi. “If inflation is in control, chances of a rate cut brighten.”
RBI Governor Raghuram Rajan linked further policy action to the strength of the monsoon as he cut benchmark borrowing costs for a third time this year on June 2. India’s industrial output climbed 2.7% in May from a year earlier, official data showed after the close of markets Friday. That missed the median estimate of 4% in a Bloomberg survey.
GAIL India rallied 3.3% to its highest level since July 7. Sun Pharmaceutical gained 1.6%, extending this year’s gain to 11%. Cipla added 2%. Lupin climbed 1%, taking this year’s rally to 32%, the most among the 30 Sensex companies.
Housing Development Finance Corp soared 3.2%, the most since May 11. Tata Consultancy gained 1.4%. Maruti Suzuki added 2.6%, the most since June 1.
International investors sold a net $39.5mn of Indian stocks on July 9, paring this year’s inflows to $6.8bn.
The Sensex has risen 1.7% this year and trades at 15.6 times projected 12-month earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.5.
Meanwhile the rupee fell 0.2% to 63.5175 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg.
Indian government bonds fell, pushing the 10-year yield up by the most in two weeks, on speculation a central bank plan to sell debt will damp demand for existing notes.
The Reserve Bank of India will auction Rs100bn ($1.6bn) of sovereign securities via open-market operations on July 14, it said in a statement after the close of markets Friday. Consumer prices probably rose 5.10% in June from a year earlier, according to the median estimate in a Bloomberg survey before official data due Monday. That’s faster than May’s advance of 5.01%.
The yield on the bonds due May 2025 climbed seven basis points to 7.87% in Mumbai, according to prices from the central bank’s trading system. That’s the biggest increase for benchmark 10-year debt since June 29.
“The RBI’s decision to sell bonds is to suck out excess liquidity from the financial system,” said Ajay Manglunia, head of fixed income at Edelweiss Financial Services in Mumbai. The central bank’s worry is that excess money may fuel inflation, he said.
India’s one-year interest-rate swaps slumped to their lowest level since July 2013 last week on speculation cash supply is improving. Net average banking-system liquidity was in a surplus of about 130bn rupees as of July 11, compared with a deficit of Rs574.8bn at the end of June 27, according to estimates by Kotak Mahindra Bank.