Sensex rises 259 points on govt measures

Benchmark index caps best quarter since Modi’s 2014 election win; fertiliser stocks rally

STOCKS rose, with the benchmark gauge completing its best quarter since Prime Minister Narendra Modi assumed office two years ago, as the government stepped up measures to bolster growth and global equities recovered from the Brexit vote.

The S&P BSE Sensex surged 1% to 26,999.72 at the close, up 259.33 points, taking its gain since the end of March to 6.5%. The advance is the biggest since the 14% rally in the period ended June 2014, when Modi won the biggest parliamentary majority in 30 years.

The government in the last two weeks has eased rules on foreign direct investment, ap- proved a new mineral mining policy and a proposal to increase salaries for federal staff. The policy measures have helped soften the impact of the central bank governor Raghuram Rajan’s impending departure that was announced less than a week before the UK’s ref- erendum on membership of the European Union.

“The series of government actions has boosted confidence,” Vikas Gupta, an executive vice-president at Arthveda Fund Management in Mumbai, said by phone. “Economic recovery has definitely started and the reforms are improving business sentiment.”

Tata Motors, the biggest truckmaker and owner of Jaguar Land Rover, rose the most in a week. ICICI Bank climbed the most in three weeks. Dr Reddy’s Laboratories was the top performer on the Sensex. Larsen & Toubro, NTPC and lender Axis Bank were the best performers this quarter, with gains of more than 20% each.

“Investors can now see the economic recovery in company bottom lines and the macro numbers,” Gupta said. “Demand was missing, which will be taken care of by the salary boost. So, increased demand and a good monsoon will create a positive economic cycle.”

Fertiliser companies’ shares rallied on expectations the government will take steps that will enable them to boost working capital, Aditya Jhawar, an analyst at Investec Capital Services India, said by phone.

Gujarat Narmada Valley Fertilizers & Chemicals soared 4.7%, extending Wednesday’s 10% rally. Gujarat State Fertilizers & Chemicals rose the most since June 8, and gained 4.3%. National Fertilizers added 4.9%.

The Nifty added 1% to 8,287.75 on the last day of Junedelivery derivatives. The roll costs, or the price traders pay to replace current month futures with July securities, climbed to 59 basis points of the contract’s value at 4.10 pm in Mumbai compared with the six-month mean of 48 basis points. Bloomberg