India’s S&P BSE Sensex (SENSEX) climbed to a record after Goldman Sachs Group Inc. said the country’s elections may fuel further gains in stocks. The rupee and bonds advanced after data showed inflation eased.
The Sensex advanced 0.7 percent to 21,957.76 at 12:18 p.m. in Mumbai after the U.S. bank raised the nation to overweight from marketweight. The currency rallied as much as 0.5 percent to the strongest level since March 11. The yield on the 8.83 percent sovereign bonds due November 2023 dropped two basis points, or 0.02 percentage point, to 8.77 percent.
The Sensex has risen 3.5 percent this year amid speculation elections in May will deliver a government with the mandate to revive economic growth from a decade low. Wholesale prices rose 4.68 percent in February from a year ago, compared with 5.05 percent in the previous month and lower than the 4.9 percent median estimate in a Bloomberg News survey, according to data released after trading ended on March 14.
“Liquidity has been very strong and the upgrade by Goldman Sachs will boost sentiment of foreign investors,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said by phone from Kollam in south India today.
Global investors have plowed $ 1.14 billion into domestic stocks, the most among Asian markets tracked by Bloomberg after Indonesia, and bought $ 6.2 billion of local debt.
The rupee gained 0.3 percent from March 14 to 61.0137 per dollar. It has rebounded almost 13 percent from its Aug. 28 record. India’s markets were closed yesterday for a holiday.
“The momentum has been positive for the rupee amid good data,” said Vikas Babu, a trader at state-owned Andhra Bank in Mumbai. “I expect a status quo at the Indian central bank’s policy review after the recent rate hikes.”
Reserve Bank of India Governor Raghuram Rajan, who has increased borrowing costs three times since taking office in September, warned Feb. 23 that inflation remains the biggest threat to the economy, while saying that any central bank rate action will depend on data. The next review is due April 1.
Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker by volume, jumped 8 percent to a record after saying it will seek minority shareholders’ approval on a plan to build a factory that will be wholly owned by parent Suzuki Motor Corp. (7269) As many as 16 investors representing mutual funds and insurers called the plan, announced by Suzuki in January, a “blatantly wrong and value-eroding oppressive transaction,” in a March 5 letter to Maruti.
State Bank of India rose 2.4 percent, sending the Bankex index to its highest level since June. Power-equipment maker Bharat Heavy Electricals Ltd. (BHEL) climbed to a nine-month high.
The Sensex trades at 14 times projected 12-month earnings, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index is valued at 10 times.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, were unchanged from March 14 at 8.65 percent, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards rose 0.5 percent to 62.13 per dollar. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
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