Sensex at highest close in over 15 months

India’s main stock index rose 1.5% to its highest close in more than 15 months on Tuesday in anticipation of stronger quarterly earnings and hopes for a pickup in consumer spending. Financial issues led by State Bank of India, the country’s largest lender, firmed as advance taxes paid by them for the September quarter were sharply higher than a year ago, indicating robust profit rise.

Banks were also helped by hopes the central bank will relax accounting rules for their government bond holdings, a move that will lower provisioning for notional mark-to-market losses, traders said. “Some good advance tax numbers contributed to the rally today. Whatever we have seen so far is good, and expect other figures to be robust as well,” said Neeraj Dewan, director of Quantum Securities. The 30-share BSE index rose 1.48%, or 240.26 points, to 16,454.45, its highest close since late May 2008.

All but three of its constituents gained. The 50-share NSE index closed 1.74% higher at 4,892.10. The benchmark, which had last week more than doubled from its March low, is up over 70% since the beginning of the year. “The market is fairly priced but as we expect earnings upgrade, it would not look expensive,” said Mahesh Patil, co-head of equity at Birla Sun Life Mutual Fund. State Bank climbed to its highest in 18 months as a source said the lender paid Rs1,832 crore ($377 million) as advance tax for the September quarter, higher than a year ago.

The stock ended up 2.7% at Rs2,009.25, after hitting Rs2,019.90. Rival ICICI Bank rose 2% to Rs842.30. Telecoms firm Bharti Airtel closed down 0.8% at Rs416.05 after South Africa’s communications regulator said it might not grant approval this year for a proposed tie-up between Bharti and mobile phone group MTN. A finance ministry official said on Tuesday New Delhi was paying arrears of about Rs20,000 crore ($4.1 billion) in September to government workers, ahead of big festivals in October.

Traders said the payout would boost demand for consumer goods, appliances, cars and motorcycles. Diversified ITC rose 1.9% to Rs229 while motorcycle maker Hero Honda climbed 3.5% to Rs1,615.15. Top software services exporter Tata Consultancy gained 1.9% to Rs570.90 on higher quarterly tax payment. Energy giant Reliance Industries Ltd climbed 1.55% to Rs2,180.15 and leading engineering and construction firm Larsen & Toubro added 1.355 to Rs1,629.40. In the broader market, gainers led losers in the ratio of 1.8:1 on relatively good volume of 497 million shares.

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