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Indian stocks rise to five-month high

Government reform hopes boost Sensex at Mumbai close

Gulf News

Mumbai: Indian equities climbed to their highest level in more than five months amid speculation the government may implement measures to bolster economic growth.

The BSE India Sensitive Index, or Sensex, increased 1.1 per cent to 17,884.10, according to preliminary closing prices in Mumbai, the highest level since March 14. Infosys Ltd, the second-largest software maker, surged the most in a month after a US court dismissed a case alleging visa fraud filed by a former employee. Tata Motors Ltd, the owner of Jaguar Land Rover, rose to a six-week high. The stock market was closed Tuesday for a holiday.

India must damp inflation, allow more foreign investment to revive growth and raise diesel prices to contain subsidies that have widened a gap in government finances, Prime Minister Manmohan Singh’s Economic Advisory Council said August 17. The budget and a current-account deficits have prompted Standard & Poor’s and Fitch Ratings in June to say they may strip the nation of its investment-grade credit rating.

India’s budget deficit was 5.8 per cent of gross domestic product in the 12 months ended March 31, the widest among the largest emerging markets. Singh’s administration is seeking to narrow the gap to 5.1 per cent in the current fiscal year. The government has forgone foreign investment in industries from retailing to pensions and insurance because of opposition to liberalisation from coalition allies, leading to the slowest growth in almost a decade in the three months ended March.