Indian stocks rose, with the benchmark gauge erasing a weekly loss in the final hour of trade, as global shares rallied after the Bank of England eased policy in the latest move to bolster growth.
Automakers Hero MotoCorp and Bajaj Auto jumped to records. Axis Bank  and State Bank of India were among the best performers on the S&P BSE Sensex. Tata Steel paced gains among steelmakers after the government extended the minimum import price regime. Tata Motors rallied to a 15-month high after Jaguar Land Rover’s sales in July jumped 34% from a year earlier.
The Sensex closes 1.31%, or 363.98 points, higher at 28,078.35, marking its biggest single-session gain since 11 July. European stocks rose for a third day and developing-nations equities extended their weekly advance after the Bank of England pared borrowing costs to a record on Thursday while unveiling a stimulus package aimed at curbing the fallout from Brexit. Foreign funds have been net buyers of Indian shares for five months through July, the longest stretch of inflows since November 2014.
“The outlook for overseas inflows is improving with more nations opting for monetary stimulus,” Gurunath M Mudlapur, managing director at Atherstone Capital Markets in Mumbai, said by phone.
Global funds bought $94mn of local stocks on August 2, taking this year’s inflows to $4.8bn, according to data compiled by Bloomberg. They’ve been net sellers on only two days since July 1, the data show.
The purchases have helped the Sensex rebounded 22% from a low in February, and pushed up its valuations to 16.3 times 12-months earnings. That’s the most expensive in about 15 months and compares with a multiple of 12.4 for an index of emerging markets.
The high price-to-earnings ratio capped gains in the Sensex after it touched a one-year high last month.
Yesterday’s increase comes after Indian lawmakers on Wednesday night approved the creation of a national sales tax a decade after the move was first proposed, handing Prime Minister Narendra Modi the biggest legislative victory since he took office in 2014. The tax can add as much as 2 percentage points to growth, Finance Minister Arun Jaitley has said.
“The goods-and-services tax is a game changer, which will boost long-term economic growth and earnings,” Mudlapur said.
Hero MotoCorp soared 5.1% to a record. Bajaj Auto rallied 4.3% to an all-time high. Axis Bank gained 3.6%, the most since March 2. State Bank of India added 3.2% to its highest level since December 9. ICICI Bank rose for the first day this week.
Tata Steel added 2.1%, extending the year’s rally to 47%. JSW Steel rose 1.6% and Steel Authority of India advanced 2.9%. The government extended the minimum import prices on steel for two months until October 4, a Trade Ministry statement said.
Tata Motors jumped 3.3%, extending Thursday’s 4.5% surge. Jaguar Land Rover sold 44,486 vehicles in July, 34% more from the year-ago month.
Meanwhile the rupee yesterday strengthened against the US dollar, after local equity markets gained over 360 points. This is the eighth out of nine trading sessions when the rupee closed higher. The home currency closed at 66.78 a dollar, up 0.22% from its previous close of 66.92. The rupee opened at 66.92 a dollar and touched a high and a low of 66.75 and 66.92, respectively.
So far this year, the rupee is down 0.93%, while foreign institutional investors (FIIs) have bought $4.78bn in equity market and sold $1.06bn in debt market. India’s 10-year bond yield closed at 7.168%, as compared with its Thursday’s close of 7.171%.
Asian currencies followed a rise in Asian and global stock prices yesterday after the Bank of England (BoE) launched a potent post-Brexit stimulus campaign, but some caution before a big US jobs report limited gains.
Taiwan dollar was up 0.57%, Malaysian ringgit 0.53%, Philippines peso 0.32%, South Korean won 0.31%, Indonesian rupiah 0.2%, Thai baht 0.2%, Japanese yen 0.2% and Singapore dollar 0.1%. However, China offshore spot was down 0.06%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.609, down 0.16% from its previous close of 95.758.