Indian companies aiming higher

Indian companies have benefited from the country's economic growth, which the government predicts will reach 8% for the fourth year. Prime Minister Manmohan Singh on Oct. 12 predicted the economy will expand 8.5% in the fiscal year ending March 31, faster than the central bank's estimate of as much as 8%.

Economic growth has boosted stocks, attracting capital into the equity market. The Bombay Stock Exchange's Sensitive Index, which rose to a record 12,994 points Oct. 17, is headed for the fifth year of gains. The Sensex has advanced 35% in 2006.

Global funds bought an average $151 million a day of equities in the week to Oct. 18, compared with $45 million the previous week, stock-exchange data showed. They invested an average $42 million in stocks a day in the three months ended Sept. 30, compared with average daily sales of $22 million in the previous quarter.

The rupee's advance was curbed by concern a move by Tata Steel Ltd., the nation's second-biggest steelmaker, to buy the U.K.'s Corus Group Plc will cause an outflow of foreign exchange from the country.

The rupee has fallen off highs after the news about Tata Steel's acquisition plan came in. The market is concerned about outflows and those who were short on dollars have been covering those positions.

Tata today said it agreed to buy Corus for 4.3 billion pounds ($8 billion), the biggest overseas acquisition by an Indian company. The Indian steelmaker said it will pay Corus shareholders 1.84 billion pounds in cash. The rupee also fell on speculation importers bought dollars, taking advantage of the local currency's gains.