The Bombay Stock Exchange's Sensitive Index rose for a second day today, climbing to a six-month high, after BNP Paribas said the gauge may rise another 10 per cent due to a better outlook for corporate earnings.
ICICI Bank, Mahindra & Mahindra (M&M) and Tata Power, were among BNP’s top picks that rose more than 2 per cent.
"There is an improvement in fundamentals, in terms of growth in some sectors, companies’ ability to raise finances to tide over balance-sheet problems, and confidence about future growth," BNP’s analyst Manishi Raychaudhuri wrote.
The Sensex rose 1.7 per cent to 11,329.05. The gauge posted its seventh week of gains advancing to its highest since October 14. The S&P CNX Nifty Index on the National Stock Exchange added 1.7 per cent to 3,480.75. The BSE 200 Index climbed 1.8 per cent to 1,344.16. Nifty futures for April delivery added 1.4 per cent to 3,474.50.
The Sensex may climb to 12,300 by the end of the year, higher than an earlier forecast range of 10,000 to 11,500, Raychaudhuri said.
Indian and Chinese stocks were driven down too far in the meltdown that started last year, said Jon Thorn, manager of the India Capital Fund.
"India and China got marked down more out of fear and panic rather than for a fundamental reason," Thorn said. "Indian large caps will outperform smaller companies as the constraints on capital and cost of capital will benefit larger companies over their smaller rivals."
Indian banks are among the cheapest in the world, said Thorn, whose picks include State Bank of India, ICICI Bank and Punjab National Bank.
ICICI, the nation’s No 2 lender, rose 2.3 per cent to Rs 434.10. M&M, the country’s largest maker of sport-utility vehicles, added 6.1 per cent to Rs 471.30. Tata Power, India’s biggest electricity generator outside state control, gained 3.8 per cent to Rs 887.65.
BNP’s other picks include Axis Bank, which rose 5.5 per cent to Rs 529.60, and Bharat Heavy Electricals, which gained 1.4 per cent to Rs 1,643.40.
Overseas investors bought a net Rs 1.8 crore ($360,000) of Indian stocks on April 22, according to the regulator.
GlaxoSmithKline Consumer Healthcare rose 6.2 per cent to Rs 785.75. The Indian maker of Horlicks and Boost health drinks said first-quarter profit rose 48 per cent to Rs 83.890 crore.
HDFC Bank added 1.6 per cent to Rs 1,110.25. India’s second-biggest lender by market value reported that its fourth-quarter profit rose 34 per cent to Rs 631 crore.
IDBI Bank jumped 13 per cent to Rs 67.30, the most since October 13. The Indian lender said profit in the fourth quarter rose 28 per cent to Rs 314 crore.
Piramal Healthcare gained 4 per cent to Rs 215.95. The Indian generic drugmaker said fourth-quarter profit rose 59 per cent to Rs 115 crore. Sales climbed 9.3 per cent to Rs 851 crore.
Ranbaxy Laboratories slid 2.2 per cent to Rs 175.90. India’s biggest drugmaker, controlled by Daiichi Sankyo of Japan, may report a loss of Rs 18 crore in the quarter ended March 31, according to the median estimate of analysts surveyed.
