Indian stocks climbed for a sixth day, reversing an earlier decline, as European shares rose amid speculation the region’s central bank will ramp up monetary stimulus.
Maruti Suzuki India, the maker of half the cars sold in India, was the top performer on the S&P BSE Sensex. Mahindra & Mahindra, a tractor maker, climbed for a fourth day. Larsen & Toubro, the most valuable engineering company, rose to a two-month high, while Hindustan Unilever gained for the first time in four days.
The S&P BSE Sensex rose 0.55% or 134.73 points to 24,793.96 at the close in Mumbai, posting its longest winning streak since October. The gauge erased an intraday decline of 0.8% after European shares began trading at about 1:30 pm local time. Economists surveyed by Bloomberg forecast that the European Central Bank will deliver a package of easing measures in its attempts to bolster price growth.
“There’s speculation that there will be efforts by central banks to boost markets,” R K Gupta, managing director of Taurus Asset Management Co, which has $520mn, said by phone from New Delhi. “In India, hopes of a rate cut have increased after the budget.”
The Sensex on Friday capped its biggest weekly rally since December 2011 after Finance Minister Arun Jaitley February 29 pledged to further shrink the budget gap, stoking speculation of an interest-rate cut by the Reserve Bank of India. Twelve of 16 economists surveyed by Bloomberg after the budget expect the RBI to cut the benchmark rate by as much as 50 basis points before the April 5 review.
The budget also plans to boost spending on public projects, while increasing allocation to a rural jobs program, proposals that have spurred capital inflows. Global investors have bought $1.1bn of local shares this month, paring this year’s outflows to $1.8bn. The inflows have coincided with a rebound in prices of oil, iron ore and copper. “Global markets have stabilised a bit, especially after the rally in commodities, and the good news for India is that foreign investors are back as buyers,” said Gupta.
Maruti Suzuki surged 3.3% to pare this year’s loss to 23%. Its parent Suzuki Motor Corp started shipping India-built cars to Japan for the first time and said plants in its biggest market are now capable of making vehicles at the same level of quality as factories in Japan. Mahindra & Mahindra added 1.3%.
Larsen & Toubro increased 2.1% to its highest level since January 6. Hindustan Unilever added 1.6%. Foreigners bought $115mn of Indian shares on March 8. The Sensex has declined 5.1% this year and trades at 15.2 times 12-month projected earnings, compared with 11.4 for the MSCI Emerging Markets Index.
Meanwhile the rupee rebounded from a one-week low as local stocks reversed losses amid expectations the nation will attract more equity flows.
The currency ended 0.2% higher at 67.2150 a dollar in Mumbai, taking its advance this month to 1.8%, prices from local banks compiled by Bloomberg show. It fell 0.2% earlier to a one-week low of 67.5125. The S&P BSE Sensex index of shares erased a decline of as much as 0.8% to close 0.6% higher and complete a sixth straight day of gains, its longest winning run since October.
“The revival in stocks helped the rupee spring back into gains,” said Anindya Banerjee, associate vice-president for currency derivatives at Kotak Securities in Mumbai. Stocks advanced as there were potential inflows seen on account of the government’s share sale in Container Corp of India, he said. Overseas investors bought $115mn more Indian equities than they sold on Tuesday, a fifth day of inflows, data compiled by Bloomberg show. Shares in Europe also rebounded Wednesday after two days of declines as investors speculated on further stimulus support from the European Central Bank.
Indian sovereign bonds fell for a second day, with the 10- year yield rising one basis point to 7.65%, according to prices from the Reserve Bank of India’s trading system.