The Bombay Stock Exchange Sensitive Index rose for a fourth day on Monday, extending May’s biggest monthly surge in 17 years, led by commodity producers and auto makers.
Sterlite climbed 7.3 per cent as commodity producers gained on higher metal prices. Hindalco, the largest aluminum producer, added 3.5 per cent while Tata Steel jumped 8.4 per cent. Hero Honda, India’s biggest motorcycle maker, rose 2.2 per cent after it said sales increased in May. “We expect the market to scale up over the next one year,” said Mahesh Patil, who helps manage $2 billion in equities at Birla Sunlife Mutual Fund in Mumbai. “We could see earning upgrades in one or two quarters down the line; that should support the market,” he added.
The Sensex advanced 215.38 points, or 1.5 per cent, to 14,840.63, the highest since September 9. The S&P CNX Nifty Index on the National Stock Exchange gained 1.8 per cent to 4,529.90. The BSE 200 Index added 1.9 per cent to 1,806.88.
Local share purchases by foreign funds in May exceeded sales by the most in 19 months. Overseas funds bought a net $4.1 billion of Indian shares last month, the most since October 2007, according to data released by the Securities and Exchange Board of India. The Sensex gained 28 per cent in May, the best month since 1992.
Inflows accelerated on speculation the newly elected Congress government, with almost twice as many seats as the main opposition, may reduce barriers to foreign investment in insurance and retail, plans that had been blocked by its former communist allies.
Sterlite rose 7.3 per cent to Rs 669, while Hindalco jumped 3.5 per cent to Rs 87.65. Tata Steel, India’s biggest producer of the alloy, climbed 8.4 per cent to Rs 439.30 after its unit Tata Steel UK got approval from lenders to change the terms of its £3.7 billion ($6 billion) loan at no increase in interest costs.
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Commodities posted the biggest monthly rally in 34 years in May, as the slumping dollar bolstered demand for energy, metals and crops as a hedge against inflation. The Reuters/Jefferies CRB Index of 19 raw materials gained 14 per cent, the most since July 1974.
Hero Honda added 2.2 per cent to Rs 1,365.90 after increasing sales in May by 22.5 per cent to 382,678 units. Mahindra & Mahindra, India’s biggest maker of sports utility vehicles, rose 6.6 per cent to Rs 712.7 after it said it sold more units in May.
NTPC, India’s biggest electricity producer, increased 6.5 per cent to Rs 229.35 after Meera Shankar, India’s ambassador to the US, said on May 30 in Washington the Manmohan Singh government will speed up implementation of the US-India civil nuclear agreement. “Nuclear energy is a top priority for the Indian government,” she said.
Jaiprakash Associates, India’s biggest builder of dams, rose for the fourth day after it informed the exchange a court has approved the merger of four group companies with itself. The stock rose 5.7 per cent to Rs 220.10.
Indian equities were boosted by a rally in the US and Asian stocks. US stocks last week completed a second weekly advance, capping the first three-month gain for the Standard & Poor’s 500 Index since its record in 2007. Asian stocks rose, extending the longest monthly winning streak since the financial crisis began in 2007, as an expansion in Chinese manufacturing for a third month drove commodity prices higher.
Oil & Natural Gas Corp, India’s largest oil and gas producer, climbed 0.6 per cent to Rs 1,176.70.
Crude oil futures in New York climbed as much as 3 percent $68.29 a barrel in after-hours trading, the highest since Nov. 10. The price advanced 30 percent in May, the biggest monthly increase since March 1999.