India's broadest stock rally since 2003 luring top managers

The broadest advance for Indian stocks in 11 years has convinced some of the nation's biggest money managers that the rally is far from over. All but one of the 30 stocks in the S&P BSE Sensex have risen this year, up from 16 in 2013, as the benchmark index surged 26 per cent for the best performance among the world's 10 biggest markets. The last time a rally was this comprehensive, in 2003, the Sensex extended its advance for another four years. India's $1.5 trillion equities market, propped up by exporters since 2010, is now getting support from banks and infrastructure companies after Prime Minister Narendra Modi's May election victory boosted confidence in the economy. The participation of stocks most reliant on domestic demand suggests the Sensex bull market is sustainable after lasting longer than any other since 1986, according to IIFL Wealth Management Ltd. and ICICI Prudential Asset Management Co.

"This is one of the most broad-based rallies," S. Naren, the chief investment officer at Mumbai-based ICICI Prudential, which oversees $19 billion as India's second-largest money manager, said in an interview on Sept. 10. "The outlook for the economy for the next three to five years has significantly brightened. Compared to all other countries in the world it has become much more attractive."

International investors are also bullish. Foreigners have boosted local stock holdings by $13.8 billion this year, the most among eight Asian markets tracked by Bloomberg. Franklin Templeton Investments and Goldman Sachs Asset Management this month joined Jeffrey Gundlach, the U.S. bond fund manager at DoubleLine Capital LP, in recommending the nation's shares.