India’s Sensex has year’s best rally

Indian stocks had the year’s best rally as global equities advanced ahead of a European Central Bank meeting later on Wednesday to decide on interest rates, and as recent declines lured investors. State Bank of India, the nation’s biggest lender, paced gains among its peers. Tata Motors Ltd., the largest truckmaker and owner of Jaguar Land Rover, jumped the most in about four months. The BSE India Sensitive Index soared 2.7 per cent to 16,454.3 at close, matching the gauge’s advance on January 3. Interest rates were not cut by the ECB as most economists predicted. UTI Asset Management Co., the country’s best-performing debt-fund manager, expects the Reserve Bank of India to cut its key interest rate by 25 basis points at its review on June 18 after Deputy Governor Subir Gokarn signalled slowing growth and lower oil prices increased scope for easing. India’s economy grew 5.3 per cent in the March quarter from a year earlier, the least in nine years. The RBI cut rates on April 17 for the first time in three years, after raising it a record 13 times from mid-March 2010 to October 2011 to cool consumer prices. Inflation averaged 7.1 per cent in the first four months of this year, compared with 9.5 per cent in the whole of 2011. Crude-oil prices in New York have fallen 14 per cent this year. Offshore investors withdrew a net $103 million (Dh378.8 million) from local shares on June 4, reducing their investment in Indian equities this year to $8.3 billion, according to the market regulator. Foreigners reduced holdings by $273 million in May. Still, investments into local equities are at record levels, according to data compiled by Bloomberg.