Reliance Industries Ltd was the top performer on the Sensex. Sun Pharmaceutical Industries rebounded from its steepest plunge on record. Mahindra & Mahindra, the largest maker of tractors, advanced to its highest level in six months.
Stocks climbed the most in a month as a tumble in global commodity prices and an advancing monsoon eased investor concerns about inflation.
Reliance Industries Ltd was the top performer on the Sensex. Sun Pharmaceutical Industries rebounded from its steepest plunge on record. Mahindra & Mahindra, the largest maker of tractors, advanced to its highest level in six months.
The Sensex surged 1.2% to 28,504.93, or 323 points, at the close on Wednesday. Raw material prices have fallen about 9% in the past two months as growth slows in China, the largest buyer of metals and energy. That's improved the inflation outlook for India, which imports about 80% of its oil, and also the odds for a rate cut by the central bank next month. Foreigners have bought a net $1.1 billion of local shares this month, the most among eight Asian markets tracked by Bloomberg.
"The benefits of the commodities downcycle for Indian companies are going to be lasting," Taher Badshah, co-head of equities at Motilal Oswal Asset Management Co, said. "And that's being appreciated by the markets."
Reliance Industries jumped 4.2% to a one-year high. Oil & Natural Gas Corp, India's largest explorer, gained 1.8%, its first climb this week. Sun Pharma climbed 3.6%, after tumbling 15% on Tuesday after it said revenue will remain flat or decline as it absorbs a rival it bought last year. Cipla increased 2.2%.
Three of the four Sensex members that have posted results so far have beaten or matched estimates. About 40% of the gauge's 30 members exceeded or matched profit estimates in the March quarter, compared with 47% in the December quarter and 67% in the July-September period.
Hindustan Unilever jumped 3.3%. Mahindra & Mahindra gained 3.4%, taking this year's advance to 8.7%.
HDFC rose 2.6%. State Bank of India advanced the most in three weeks and ICICI Bank, the biggest private lender, increased 1.7%.
The Sensex trades at 15.8 times projected 12-month profits, versus 11.5 times for the MSCI Emerging Markets Index.
Foreigners sold a net $25 million of Indian stocks on July 21, ending six straight days of inflows.
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