Indian stocks rose for a sixth day, sending the benchmark index to a three-week high, as construction companies advanced after the government pledged to build more roads and increase investment in the sector.
Larsen & Toubro Ltd. (LT), the nation’s biggest engineering company, gained the most in two weeks, while Ashoka Buildcon Ltd., a builder of roads, ports and bridges, climbed to a five-month high. State Bank of India Ltd., the largest lender, increased for a fourth day.
The S&P BSE Sensex (SENSEX) added 1.2 percent to 27,825.68 at 11:27 a.m. in Mumbai, poised for its longest rising streak in four months. The government increased excise duty on petrol and diesel by 2 rupees (3 U.S. cents) a liter to raise money to build 15,000 kilometers of roads, according to a statement yesterday. State-run lenders will be the focus of a gathering of bank chiefs and regulators from today as they seek to reverse companies’ lowest profitability in at least nine years.
“2014 was the year of intent and induction and 2015 is going to be the year of implementation,” Nilesh Shah, managing director at Mumbai-based Envision Capital Ltd., said in an interview with Bloomberg TV India today. Prime Minister Narendra Modi’s government “has taken six months to really understand what needs to be done. 2015 is going to the year when all of that is going to be put to work.”
India’s manufacturing Purchasing Managers’ Index rose to 54.5 in December, the highest since December 2012, from 53.3 in November, according to data released today by HSBC Holdings Plc and Markit Economics. A reading above 50 indicates an expansion.
The Sensex rallied 30 percent in 2014, the most among the world’s 20 biggest markets after China. An extension of that may hinge on Modi’s ability to push through reforms after opposition parties stalled the passage of some legislation.
Modi, Reserve Bank of India Governor Raghuram Rajan, finance minister Arun Jaitley and the heads of government lenders will assemble in Pune, a city near Mumbai, to discuss policies to help boost corporate earnings and capital ratios, according to Reliance Securities Ltd.
Larsen & Toubro Ltd. added 0.9 percent, extending last year’s 40 percent rally. Ashoka Buildcon climbed 7.3 percent, after gained as much as 10 percent to an intraday record. Patel Engineering and Hindustan Construction increased at least 1.8 percent. Man Infraconstruction Ltd. jumped to a one-month high.
Modi’s administration last week issued an executive order to make it easier for companies to buy land, aimed at spurring infrastructure development in rural areas. The order came after more than 1 trillion rupees of projects were stalled, including 600 billion rupees of roads.
State Bank of India advanced 1.1 percent. ICICI Bank Ltd. (ICICIBC), the country’s biggest private lender, gained 2 percent to its highest level in four weeks.
International investors bought a net $ 87.6 million of local shares on Dec. 31, taking their total purchases in 2014 to $ 16.1 billion, the second-most in Asia, after Japan. The Sensex is valued at 15.3 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.1.
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