Indian Stocks Rise, Led by Metal Producers; Sun Pharma Plunges

June 26 (Bloomberg) -- Indian stocks rose, paring the benchmark index’s second weekly decline since early March. Sterlite Industries (India) Ltd. led gains by metal producers on optimism economic recovery may spur demand.

Sterlite, the nation’s biggest copper producer, added 2 percent as the price of the metal used in power cables rallied and a government report showed the U.S. economy shrank less than expected in the first quarter. Hindalco Industries Ltd., the largest aluminum producer, also climbed 2 percent.

“Things are definitely improving,” said Apurva Shah, head of research at Prabhudas Liladher Pvt. in Mumbai. “Positive retail sales data, ample short-term liquidity and home prices have leveled off; all point towards stabilization of the economy.”

The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 145.45, or 1 percent, to 14,491.07 at 9:59 a.m. in Mumbai today. The S&P CNX Nifty Index on the National Stock Exchange added 1.1 percent to 4,289.20. The BSE 200 Index increased 1.1 percent to 1,768.21.

Sun Pharmaceutical Industries Ltd., India’s biggest drugmaker by market value, plunged 15 percent after generic drugs made by its unit Caraco Pharmaceutical Laboratories Ltd. were seized by U.S. authorities, who cited violations of manufacturing standards.

Sterlite advanced 2 percent to 587.85 rupees. Hindalco climbed 2 percent to 86.15 rupees.

Reliance Industries Ltd., India’s most valuable company, gained 2.2 percent to 2,000.60 rupees. ICICI Bank Ltd., the second-biggest lender, rose 2.4 percent to 717.05 rupees. Infosys Technologies Ltd., the second-biggest software services provider, added 1.7 percent to 1,788.60 rupees.

The Sensex has risen 50 percent this year on speculation government stimulus spending worldwide will help to end the first global recession since World War II. Shares on the Sensex are valued at 16.3 times reported earnings, almost double the 8.8 times they fetched in March.

Asian Stocks

Indian shares also gained after a rally in Asian stocks.

The MSCI Asia Pacific Index gained 1.3 percent to 103.09, taking its advance this week to 1.6 percent. The gauge has jumped 46 percent from a more than five-year low on March 9.

Sun Pharmaceutical tumbled 15 percent to 1,098.40 rupees. Drugs and raw ingredients for pain, heart ailment and psychiatric medications were confiscated at three Caraco facilities in Michigan to prevent the Detroit-based company from distributing its products until the manufacturing deficiencies are corrected, the U.S. Food and Drug Administration said in a statement yesterday. Shares of Caraco, which is 76 percent owned by Sun Pharmaceutical, dropped the most in 15 years.

Corrective actions had been taken and “continual improvements” are being made while Caraco works to resolve the agency’s concerns, the company said in a statement. “We don’t have any comment now, maybe later in the day,” said Mira Desai, a spokeswoman for Sun Pharmaceutical.