Indian Stocks at 7-Week High as Energy Shares Gain on Dovish Fed – Bloomberg

India's benchmark stock index climbed to a seven-week high, tracking advances in Asian equities, after the Federal Reserve signaled a slower pace of interest-rate increases.  

ICICI Bank Ltd., the biggest private lender, rose to its highest level since January and Reliance Industries Ltd., owner of the world's largest refining complex, advanced for a fifth day. Bharat Petroleum Corp. paced a rally among state-run refiners after petrol and diesel prices were raised. GAIL India Ltd. and Oil & Natural Gas Corp., the largest state-run energy companies, climbed at least 2 percent each.

The S&P BSE Sensex gained 0.6 percent at 11:21 a.m. in Mumbai, headed for its highest level since Jan. 29. Asian stocks were set for their biggest gain in two weeks after the Fed cut back the number of rate increases it anticipates enacting this year. Prospects for tighter U.S. policy had sparked outflows from emerging markets, including India, dragging them lower at the start of the year.

"The central bank action, or inaction, was no great surprise to us looking at what's going on in the global economy – things are still very sluggish,” Hugh Young, managing director for Asia at Aberdeen Asset Management Plc., which has $ 428 billion in assets, said in an interview to Bloomberg TV India. "For the last two or three years there has been huge flows out of emerging markets. This year's been a little different, which is good; we are particularly relieved.” Aberdeen is bullish on shares of Indian private sector lenders.

The Sensex, which surpassed its 50-day moving average earlier this month, has risen on all but two days in March after Finance Minister Arun Jaitley in his Feb. 29 federal budget pledged to further cut the fiscal deficit, stoking speculation of a interest-rate cut by the central bank. Reserve Bank of India Governor Raghuram Rajan said the central bank was “comforted” by the government's plan to shrink the gap to 3.5 percent of GDP while telling reporters to “wait and see” how that feeds into monetary policy. He is due to review policy on April 5.

"If outflows are controlled, the market will remain stable and wait for the next event, which could be the Reserve Bank of India's decision to bring down rates," Deven Choksey, managing director of Mumbai-based K.R. Choksey Shares & Securities Ltd., said in an interview to Bloomberg TV India.

ICICI Bank increased 2.2 percent, extending this month's rally to 22 percent. State Bank of India, the nation's biggest lender, gained 1.1 percent, paring this year's drop to 17 percent.

Reliance Gains

Reliance Industries added 1.8 percent. Tata Steel rose 1.1 percent to its highest level since June 23. Adani Ports & Special Economic Zone Ltd. climbed 2.7 percent to its highest level since Jan. 12.

Bharat Petroleum surged 5.8 percent, the most since June 2014. Indian Oil Corp. rallied 3.4 percent. Hindustan Petroleum Corp. climbed 4 percent. Indian Oil raised gasoline price by 3.07 rupees a liter in Delhi and diesel price by 1.90 rupees a liter.

GAIL India rose 2.6 percent, while Oil & Natural Gas climbed 2 percent.

Foreign investors sold $ 4.1 million of local shares on March 15, paring this month's inflow to $ 1.7 billion. The Sensex has risen 8.4 percent this month and trades at 15.3 times 12-month projected earnings. The MSCI Emerging Markets Index is valued at a multiple of 11.6.