Indian (SENSEX) stocks rose the most in Asia, led by lenders and capital goods producers, with the benchmark index paring a monthly loss.

ICICI Bank Ltd. (ICICIBC) climbed for the first time in four days, the second-best performer today on a gauge of 13 lenders. Sesa Sterlite Ltd., the nation’s largest copper producer, advanced to a one-week high. Bharat Heavy Electricals Ltd. (BHEL) gained for a second day, sending the S&P BSE India Capital Goods index to its highest level in six months.

The S&P BSE Sensex added 1.2 percent to 20,776.17 at 11:47 a.m. in Mumbai, paring this month’s loss to 1.8 percent. The gauge is set for a 2.8 percent advance this week, ending three weeks of declines. Foreigners have bought a net $ 977 million of stocks this month, poised for a third straight monthly inflow. They have purchased $ 17.3 billion of shares this year, the most in Asia after Japan.

“Sentiments have improved,” Sanjeev Zarbade, vice president of private client group research at Kotak Securities Ltd., said on Bloomberg TV India. “The capital goods sector was battered. Investors are betting on a cyclical turnaround.”

ICICI Bank surged 2.5 percent to 1,064.90 rupees, paring this year’s decline to 6.5 percent. State Bank of India, the nation’s biggest lender, added 2 percent, ending three days of decline. The 13-member S&P BSE Bankex rallied 2 percent to its highest level since Nov. 19.

Bharat Heavy rallied to a four-month high. Larsen & Toubro Ltd. (LT), the largest engineering company, climbed 0.6 percent, its sixth day of gain. Tata Power Co. (TPWR), the top generator outside state control, rose the most since Oct. 31. The capital goods index climbed to its highest level since May 22. The gauge has rallied 41 percent from this year’s low on Sept. 3.

State Elections

The Sensex also advanced amid speculation that a victory by the main opposition Bharatiya Janata Party in the elections being held in five states through Dec. 4 will boost its prospects for the next year’s national elections, according to Geojit BNP Paribas Financial Services Ltd.

Last month, a Times Now and C-voter survey found an alliance led by the BJP under Gujarat Chief Minister Narendra Modi will top Prime Minister Manmohan Singh’s ruling coalition in the 2014 polls. Neither the BJP nor Singh’s Congress will be in a position to form a government on its own as both will fall short of a majority in the 545-member lower house of parliament, the opinion poll showed.

CLSA Asia-Pacific Markets, in a presentation made in New Delhi on Nov. 18, said though opinion polls are unreliable, the markets favor the main opposition BJP over the Congress.

“There is a possibility of the poll results favoring the market sentiment,” Gaurang Shah, assistant vice president at Geojit BNP Paribas, said on Bloomberg TV India.

GDP Data

Sesa Sterlite jumped 2.6 percent while aluminum producer Hindalco Industries Ltd. (HNDL) added 1.2 percent. ITC increased 2 percent to its highest level since Nov. 20.

The Sensex is up 6.9 percent this year and is valued at 13.6 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.6 times.

Data may show India’s economy probably grew 4.6 percent from a year earlier in the quarter ended September, compared with 4.4 percent in the previous three months, according to a Bloomberg survey. The announcement is due after trading ends.

The CNX Nifty Index increased 1.3 percent to 6,171.10. The India VIX rose 2.7 percent.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

Enlarge image Commuters Wait For Buses

Commuters Wait For Buses

Commuters Wait For Buses

Prashanth Vishwanathan/Bloomberg

Commuters wait for buses during the evening rush hour in New Delhi. Data may show India’s economy probably grew 4.6 percent from a year ago in the quarter ended Sept. 30, compared with 4.4 percent in the previous three months, according to a Bloomberg survey of 40 analysts.

Commuters wait for buses during the evening rush hour in New Delhi. Data may show India’s economy probably grew 4.6 percent from a year ago in the quarter ended Sept. 30, compared with 4.4 percent in the previous three months, according to a Bloomberg survey of 40 analysts. Photographer: Prashanth Vishwanathan/Bloomberg