India’s benchmark stock index advanced for the first time in four days as some investors judged recent declines as excessive. Oil & Natural Gas Corp., the nation’s largest state-owned oil explorer, climbed 2.3 percent. Housing Development Finance Corp. (HDFC), the biggest mortgage lender, jumped 3.2 percent. The Bombay Stock Exchange Sensitive Index, or Sensex, rallied 227.9 points, or 1.4 percent, to 16,958.84 at 10:50 a.m. in Mumbai. The index’s 14-day relative strength index, measuring how rapidly prices rose or fell, dropped to 26.8 yesterday. Some investors see readings below 30 as a signal to buy. The S&P CNX Nifty Index rose 1.2 percent to 5094 and its August futures traded at 5,104.5. The BSE 200 Index increased 0.9 percent. “We were punished more than we deserved,” said Chokkalingam G, chief investment officer at Centrum Broking Pvt. in Mumbai. “Valuations are extremely attractive. One can do some bottom-fishing and buy stocks with a six to 12-month horizon. The long-term India growth story is still intact.” The Sensex has lost 18 percent this year, the worst performer after Brazil’s Bovespa Index among the world’s 10 biggest markets, on concern higher borrowing costs will slow economic growth and erode company earnings. Companies on the Sensex are valued at 14 times estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index. Debt Sales Oil & Natural Gas climbed to 279.8 rupees. Reliance Industries Ltd. (RIL), the most valuable company, gained 1.6 percent to 771.2 rupees. Housing Development Finance advanced 3.2 percent to 665.05 rupees. The lender is planning record debt sales in 2011 to meet demand for loans from homebuyers. The biggest issuer of rupee- denominated corporate bonds is aiming to raise 150 billion rupees ($3.31 billion), 38 percent more than in 2010, according to V. Srinivasa Rangan, an executive director. DLF Ltd. (DLFU), the biggest developer, slumped 3.3 percent to 182.6 rupees after India’s antitrust regulator fined the developer 6.3 billion rupees for “abuse of dominance” related to the sale of apartments. The stock has lost 14 percent in the past four days. The Reserve Bank of India has raised its repurchase rate 11 times since the start of 2010 and last increased it by 50 basis points on July 26 to 8 percent to damp rising living costs. India’s food inflation accelerated to a three-month high in the week ended July 30, maintaining pressure on the central bank to increase interest rates amid the risk of a global downturn. Industrial Output Investors should hold off from bets that India’s central bank will cut rates as global inflation is unlikely to fall enough to bring down the wholesale-price index, Credit Suisse Group AG said in a report dated today. “Against the market consensus of inflation falling and thus potentially driving rate cuts, we believe it is too early for the ‘monetary easing’ trade,” Credit Suisse analysts Neelkanth Mishra and Karthik Visvanathan wrote. Prices are “unlikely to fall much” amid quantitative easing in developed markets unless the rupee rises against the dollar, they wrote. India’s industrial production grew at the quickest pace in three months in June, weathering the fastest rate increases among Asia’s major economies, government data showed on Aug. 12. “The market has sentimentally already factored in stunted economic growth for the current fiscal year,” said N. Sethuram Iyer, chief investment officer at Daiwa Asset Management India Pvt. “I see the market moving in the 5 percent to minus-5 percent range in the next three months.” Overseas funds sold a net 4.05 billion rupees ($89.2 million) of Indian equities on Aug. 12, paring their investment in stocks this year to 44.7 billion rupees, according to data on the website of the Securities and Exchange Board of India. To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net. To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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