The benchmark stock index rose to a two-week high as industrials and technology companies gained after global funds extended their monthly purchases of shares.
Larsen & Toubro, the most-valuable engineering company, rallied the most in six weeks. Tata Consultancy Services, the largest software services exporter, advanced for a second day. Dr Reddy's Laboratories, a drugmaker, increased to a record. Nestle India. slipped the most in two months after the country's food regulator clarified it hadn't lifted the ban on the sale of Maggi noodles.
The S&P BSE Sensex added 0.3 per cent to 28,298.13 at the close Thursday, after changing direction six times. Global funds have bought a net $120 million of Indian stocks this week even as six of eight Asian markets tracked by Bloomberg witnessed outflows, data compiled by Bloomberg show. They plowed $882 billion into local shares in July, the first monthly inflow since April.
"Fund flows have been good, and that is providing support to the market," Alex Mathews, the head of research at Geojit BNP Paribas Financial Services, said by phone from Kollam in the southern state of Kerala. "Corporate results have been in line with expectations, and economic data is showing macros are getting better." Mathews is advising investors to buy shares of technology companies and drugmakers.
Fourteen of 20 Sensex companies, or 70 per cent, that have announced results for the June quarter have matched or exceeded estimates, versus 40 per cent in March.
The Nikkei India July Services Purchasing Managers Index climbed to 50.8 from 47.7 a month earlier. A reading above 50 signals expansion.
Larsen jumped 2.9 per cent, the most since June 25. Tata Motors, owner of Jaguar Land Rover, added 1.8 per cent, the most since July 23. Bharat Heavy Electricals, India's biggest power-equipment maker, increased 0.7 per cent, while Mahindra & Mahindra added 0.8 per cent.
Dr Reddy's rose 1.8 per cent to an all-time high. Lupin gained 1.5 per cent and Cipla advanced 0.7 per cent. Infosys, the second-largest software exporter, added 0.6 per cent.
Nestle sank 5.2 per cent. The stock had rallied 7.7 per cent on Wednesday after a government-approved laboratory found samples of Maggi noodles to be safe, sparking speculation the ban on the popular product may be lifted soon.
Overseas investors bought a net $52 million of stocks on August 4, taking this year's inflows to $7.2 billion.
The Sensex trades at 15.8 times projected 12-month profits, compared with a multiple of 11.2 for the MSCI Emerging Markets Index.
