Sept. 2 (Bloomberg) -- India’s benchmark stock index climbed to its highest in a week after Finance Minister Pranab Mukherjee said taxes paid by companies increased, fueling speculation earnings may rise.
Jaiprakash Associates Ltd., a construction company that also makes cement, gained the most in more than three months after August sales increased. India’s corporate tax collections grew 21 percent in the April-July period from a year earlier, Mukherjee said yesterday. Sterlite Industries (India) Ltd., the nation’s biggest copper and zinc producer, advanced for a second day as metal prices rose.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, gained 32.44, or 0.2 percent, to 18,238.31. The S&P CNX Nifty Index on the National Stock Exchange rose 0.3 percent to 5,486.15. The BSE 200 Index increased 0.3 percent to 2,342.89.
“All the data points show India’s economy is gaining in strength,” said Vaibhav Sanghavi, a fund manager at Ambit Capital Ltd. in Mumbai who doesn’t disclose the value of the assets he oversees. “On the global side, the latest numbers from the U.S. and China have somewhat reduced the volatility.” Sanghavi said he’s adding shares of retailers, education, media and consumer companies to his holdings, without naming any.
Jaiprakash Sales
Jaiprakash advanced 4.3 percent to 114.65 rupees, its biggest one day gain since May 26, after August sales climbed 51 percent. Bajaj Auto Ltd., second-largest motorcycle maker, climbed 1.2 percent to 2,783.35 rupees after reporting record sales in August.
Apollo Tyres Ltd., the biggest tiremaker by market value, jumped 12 percent to 82.35 rupees, the highest in at least 19 years. The stock was rated “outperform” in new coverage by Govindarajan Chellappa and Rajasa K, analysts at Credit Suisse Group AG, saying the Indian tire industry is “in the midst of a very favorable supply-demand scenario.”
Sterlite added 2.7 percent to 160.65 rupees, extending its 3.6 percent advance yesterday. Copper in London traded near a four-month high, extending yesterday’s advance, after better- than-expected economic data in U.S. and China, the two biggest consumers, boosted the outlook for demand.
Foreign fund inflows to India’s stocks have increased 56 percent this year, making the Sensex the most expensive benchmark index in Asia and among BRIC markets that also include Brazil, Russia and China. The Sensex trades at 17.4 times estimated profit after last year’s biggest rally in 18 years.
Overseas funds bought a net 5.38 billion rupees ($114.4 million) of Indian equities on Aug. 31, raising total investments in the stocks this year to 599.2 billion rupees, according to the nation’s market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline.
