India stocks gained on optimism that the nation’s central bank may abandon its hawkish view on interest rates, in a decision due on Thursday.
The S&P BSE Sensex advanced for a fifth session, climbing 1 percent to 36,975.23 in Mumbai, its highest level since September. The NSE Nifty 50 Index also added 1.2 percent to reclaim the 11,000 mark, a level last touched in end-September. Many Asian markets remained closed for trading due to the Lunar New Year holidays.
India’s government has called on the central bank to cut interest rates to fire up the economy, as the federal budget aims to spur spending. The Reserve Bank of India will “hopefully” reduce policy rates by a quarter percentage point and switch to a neutral stance, Rajiv Kumar, vice chairman of government think-tank NITI Aayog, said. Of the 32 economists surveyed by Bloomberg as of Tuesday, eight see the RBI lowering the benchmark rate.
Sixteen of 19 sector sub-indexes compiled by BSE Ltd. advanced as a gauge of metal companies paced gains.
While Bajaj Finance Ltd. and Maruti Suzuki India Ltd. gave the biggest boost to the benchmark index, Tata Steel Ltd. was among the best performers on Sensex. Tech Mahindra Ltd. climbed 8 percent after third quarter earnings beat.
“A rate cut will only have a near-term impact given that investors remain concerned about over-leveraged companies and liquidity,” said Chokkalingam G, managing director at Equinomics Research & Advisory Pvt. He expects no change to the policy rate. “The bulls continued to dominate, as the equity benchmark indices registered fifth straight session of gains, largely on hopes of a dovish RBI monetary policy tomorrow,” Jayant Manglik, president Religare Broking Ltd. said in a note. “We remain cautiously optimistic on the markets in the near term. The commentary on the outlook of interest rates will hold significance.”