61% rise in FDI helps stocks reach new high

Mumbai : India's stocks rose to their highest in 19 months after foreign direct investment (FDI) into the nation jumped 61 per cent and the government relaxed a rule to make some state-run companies globally competitive.

Tata Motors Ltd., the biggest truckmaker and owner of Jaguar Land Rover Ltd., soared to the highest in more than two years after foreign direct investment into the nation rose to $1.74 billion (Dh6.39 billion) in November. Oil & Natural Gas Corp., the largest state-owned oil explorer, climbed the most in three weeks as the government increased the cap on the amount some state-run companies can spend to acquire assets and set up joint ventures.

"Money always chases opportunity and now the opportunity is in India," said Jagannadham Thunuguntla, chief strategist at SMC Capitals Ltd. in New Delhi. "There are not many options left for the global investor."

The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 129.50, or 0.8 per cent, to 17,360.61, the highest since May 16, 2008. The gauge has risen 3.8 per cent this week, the most in more than a month.

The Sensex climbed 80 per cent this year, set for its best annual performance in 18 years as economic expansion accelerated and the election victory of Prime Minister Manmohan Singh's ruling UPA coalition in May raised optimism he will push through reform measures.

The S&P CNX Nifty Index on the National Stock Exchange rose 0.7 per cent to 5,178.40. The BSE 200 Index increased 0.7 per cent to 2,169.65. The markets are closed today and on December 28.

The jump

Tata Motors gained 4.5 per cent to Rs779.8, the highest since October 29, 2007. Hero Honda Motors Ltd., the biggest motorcycle maker, advanced 1.8 per cent to Rs1,735.4. Reliance Infrastructure Ltd., the builder of a mass rapid transit system in Mumbai, added 3.1 per cent to Rs1,102.65.

FDI into India increased to $19.4 billion in the eight months starting April, according to government data released yesterday.