Indian stocks rallied the most in two weeks as traders closed bearish bets in carmakers and metal producers before the expiry of the monthly derivatives contracts on Thursday.
Maruti Suzuki India, the maker of half the cars sold in India, was the best performer on the S&P BSE Sensex after its fourth-quarter revenue exceeded estimates. Tata Steel surged to a one-year high and HDFC Bank rose the most in two months. Cigarette maker ITC rebounded from an intraday loss of as much as 2.8%.
The Sensex rallied 1.3% at the close, reclaiming the 26,000 mark for the first time since December-end. The gauge has rebounded 13% from a February low as global funds extended their monthly purchases of local shares. They’ve bought $364mn of stocks this month, adding to the $4.1bn they in March, the most in three years.
“Metalsmakers and automakers are rallying on short-covering before the expiry,” A K Prabhakar, head of research at IDBI Capital Capital Market Services, said by phone from Mumbai. “Quarterly results of banks and automakers has been positive so far.” He’s bullish on Infosys, India’s second-biggest software maker, Ramco Cements and lenders including Indusind Bank and HDFC Bank.
Traders rolled over 48% of the NSE Nifty 50 Index futures contracts at 4 pm to the May series that starts on Friday, versus a six-month mean of 57%, the data show. The Nifty index climbed 1.4% to its highest level since January 1. The monthly derivatives futures expire on last Thursday of every month. Maruti Suzuki soared 3.9% to its highest level since February 2. Total revenue in the March-quarter climbed to Rs153bn ($2.3bn), beating the Rs148.8bn average of 27 analysts’ estimates compiled by Bloomberg. Profit declined 12% to Rs11.3bn, versus the Rs11.9bn average forecast in the survey.
Axis Bank may report later today its profit rose 7% to Rs23.3bn, according to the median estimate of 28 analysts in a Bloomberg survey. The shares increased 2.2% to the highest level since November 16.
So far, four out of six Sensex companies that have reported March-quarter results beat or matched estimates.
Tata Steel jumped 3.2% to its highest level since May 11. The shares have climbed 38% this year and is the best performer on the Sensex.
Godfrey Phillips India, a unit of Phillip Morris International, tumbled 17%, the most since August 1993, after a report the government may ban foreign direct investment in tobacco ITC climbed 2% after dropping as much as 2.8%.
Foreigners bought $36.1mn of local stocks on April 25, extending this year’s inflows to $1.6bn. The Sensex has risen 2.6% this month and trades at 16 times 12-month projected earnings versus 11.8 for the MSCI Emerging Markets Index. 
Meanwhile the rupee closed stronger against the US dollar yesterday, after local equity markets gained over 320 points. However, traders are cautious ahead of the start of the US Federal Reserve’s two-day policy meeting.
The currency closed at 66.52, up 0.14% from its previous close of 66.62. The rupee opened at 66.72 per US dollar and touched a high and a low of 66.48 and 66.79, respectively, in intraday trade.
“This is supported by strong fundamentals like fresh selling of dollars by exporters and banks. Recovery in domestic market sentiments will lead to more positive movement in Indian rupee,” said Choice Broking in its daily report.
India’s benchmark Sensex index rose 1.28%, or 328.37 points, to close at 26,007.30 points, a level last seen on January 1. So far this year, the Sensex has fallen 0.42%.
The Federal Reserve and the Bank of Japan (BoJ) are set to meet and announce their monetary policy decisions this week. Analysts expect that the BoJ meeting tomorrow will be reactionary and dependent on the stance laid out at the Fed today.
Other data to be released this week include first quarter growth figures for the UK, the US and the eurozone, issued on Wednesday, Thursday and Friday, respectively.
India’s 10-year bond yield closed at 7.472%, as compared with its Monday’s close of 7.468%.
So far this year, the rupee has gained 0.55%. Foreign institutional investors have bought $1.58bn from the local equity market and sold $470.60mn in the debt market.
Most Asian currencies closed lower. Malaysian ringgit was down 0.55%, Thai baht 0.26%, South Korean won 0.25% and Indonesian rupiah 0.05%.