Mumbai: Indian stocks gained for the first time in three days as overseas funds extended purchases of local shares amid government pledges to take further steps to revive a slowing economy and narrow the nation’s budget deficit.
The BSE India Sensitive Index, or Sensex, rose 0.4 per cent to 18,780.80, according to preliminary closing prices. Infosys Ltd., the second-largest software exporter, rose the most in a week. Larsen & Toubro Ltd., the largest engineering company, rose the most in about two weeks.
Overseas funds bought a net $776 million of local stocks on October 5, completing a 10th straight week of flows and taking purchases this year to a net $17.3 billion, the most among 10 Asian markets, excluding China. The recent economic reform momentum will stay “strong,” Finance Minister Palaniappan Chidambaram told reporters on Monday, promising a “credible” path to cutting a budget gap running at 5.8 per cent of gross domestic product. The reforms will result in gains in investments in India, US Treasury Secretary Timothy F. Geithner said in New Delhi on Tuesday after a meeting with Chidambaram.
Prime Minister Manmohan Singh cut fuel subsidies, opened retailing and airlines to foreigners and reduced a tax on local companies’ overseas borrowings in a wave of policy making that followed two years of policy paralysis. The measures sent the Sensex to its biggest monthly gain since January last month.
The Sensex has surged 22 per cent this year as trades at 14.9 times estimated earnings, compared with the MSCI Emerging Markets Index’s 11.3 times.
