gopalakrishna

Indian stocks rose the most in three days yesterday, led by Larsen & Toubro, after it became the latest company to report better-than-expected profits.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 74.17, or 0.5%, to close at 14,349.11. The S&P CNX Nifty Index on the National Stock Exchange advanced 0.5% to 4,332.1.
Larsen, India’s biggest engineering company, said first-quarter net income rose 33% to Rs5.02bn ($118mn).
Tata Power, India’s third-biggest electricity generator by market value, said just before the close on July 25 that net first-quarter income was little changed at Rs1.91bn, ahead of the Rs1.64bn forecast by seven analysts in a Bloomberg survey.
“They have been able to address some concerns, especially in Larsen, in top line growth,” said Mahesh Patil, who helps manage $9.6bn in assets at Birla Sunlife Asset Management in Mumbai. “Execution is the key; to some extent Larsen and Tata Power have been able to address that.”
Overseas funds bought a net Rs5.56bn ($137.9mn) of Indian stocks on Thursday, lowering their net outflow this year from local equities to $6.3bn, according to the nation’s stock market regulator.
The rupee fell the most in two weeks on speculation the nation’s refiners and other importers sold the currency to pay bills from overseas suppliers.
Importers including Indian Oil Corp, the country’s biggest refiner, typically increase dollar purchases to pay bills at the end of each month. The rupee on July 25 completed its biggest weekly advance since March, encouraging companies to buy more foreign currency.
“Some companies have covered dollar needs to meet their month-end requirements,” said Shashi Ranjan Giri, a trader with state-owned Allahabad Bank in Mumbai. “Dollar demand is going to persist for the next few days and supply is not enough.”
The rupee declined 0.7% to 42.545 versus the dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. It last week climbed 1.2%, strengthening for the third week in a row.
India has bought an average $7.8bn of crude oil a month this year, up from $5.5bn in 2007, official figures show. That reflects increased demand for the fuel and this year’s 30% jump in the price of crude in New York.
The rupee may extend its decline as slowing economic growth deters overseas investors from buying the nation’s assets, according to Tushar Poddar, an economist at Goldman Sachs Group Inc in Mumbai.
Asia’s third-largest economy may expand 7.2% in the fiscal year ending March 2010, less than an earlier estimate of 8.2%, due to higher interest rates, Poddar wrote today in a research note. “There is concern for the rupee as there will be adverse implications for capital inflows,” Poddar said. “Flows have been the biggest support for the rupee.”
India’s economy will expand 7.9% in this fiscal year, lower than an earlier forecast of 8.1%, the Reserve Bank of India said in a report on the economy yesterday in Mumbai.
India’s inflation may accelerate from a 13-year high and a further interest-rate increase is an “obvious solution,” Finance Secretary Duvvuri Subbarao said. Currency appreciation may not be an effective measure to curb inflation now, he said.
“I can’t say firmly that it has peaked because inflation will depend on a number of factors including global factors which are beyond our control,” Subbarao told Bloomberg News in a television interview yesterday from Tokyo. “That looks like an obvious solution,” he said when asked if the central bank may raise interest rates further to contain price pressures.
The Reserve Bank may today raise borrowing costs for the third time in less than two months, according to 16 of 22 economists in a Bloomberg News survey. Higher food and energy prices have been eroding support for Prime Minister Manmohan Singh, whose government faces an election before May.
“The fall in crude prices has been significant enough to bring a positive sentiment for the rupee,” said V Kumar, chief currency trader at State Bank of Travancore in Mumbai. “Exporters may also trim dollar holdings as it is unlikely the present sentiment will change any time soon.”The rupee may advance to 41 in the near term, Kumar said.

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