Bloomberg News

India’s Nifty Futures Swing Between Gains and Losses

July 10, 2012

India’s benchmark stock index rose, tracking gains in European equities, as the biggest drop in three weeks lured investors and after the weather bureau said monsoon rains may cover the entire nation sooner than expected.

Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, climbed 2.4 percent to the highest in two weeks, pacing gains among other auto stocks. Larsen & Toubro Ltd. (LT), the largest engineering company, gained 2 percent, and cigarettes-to-hotels group ITC Ltd. (ITC) jumped 2.7 percent, the most since June 29.

The BSE India Sensitive Index (SENSEX), or Sensex, rose 1.3 percent to 17,618.35, its highest close since March 15. The gauge lost 0.7 percent yesterday, the steepest loss since June 18. Monsoon rains, the main source of irrigation for India’s 235 million farmers, may cover the entire country in 24 hours, sooner than the usual July 15 date, the weather office said. Bumper crops stoke demand for vehicles, consumer goods and appliances.

“Investors sought bargains after yesterday’s declines,” Jitendra Panda, head of sales broking at Mumbai-based Future Capital Holdings Ltd., said by phone. “The news on the monsoon too helped lift sentiment.”

Stocks also rose as euro-area finance chiefs made progress on finalizing Spain’s bailout. European governments will jump- start as much as 100 billion euros in loans to shore up Spain’s banks, Luxembourg Prime Minister Jean-Claude Juncker said in Brussels. The region is India’s largest trading partner.

European stocks gained for the first time in a week, with the Stoxx Europe 600 Index (SXXP) climbing 1.1 percent.

The 30-stock Sensex has climbed 14 percent this year and is valued at 13.8 times estimated profits, compared with 10.2 times for the MSCI Emerging Markets Index. (MXEF)

‘Better Story’

Sensex earnings, excluding those of oil companies, likely grew 12 percent from a year ago in the June quarter, compared with 7 percent in the March quarter, according to Citigroup Inc. Tata Consultancy Services Ltd. (TCS) and Infosys Ltd. (INFO), India’s biggest software exporters, release results on July 12 to start the results season, followed by HDFC Bank Ltd. (HDFCB) the next day.

“While the GDP outlook continues to look more down than up, earnings are turning out to be a better story, albeit only slightly,” Citigroup analysts Aditya Narain and Jitender Tokas said in a note dated yesterday. “First-quarter Sensex (ex-oil) earnings growth should be 12 percent.”

Profit for 30 percent of Sensex companies missed estimates in the March quarter, compared with 47 percent in the period to December, as growth in Asia’s third-largest economy slowed to a near-decade low and Europe’s debt crisis crimped exports.

Auto Stocks

Tata Motors climbed for a fourth day, gaining 2.4 percent to 246.50 rupees, its highest level since June 26. Maruti Suzuki India Ltd. (MSIL), the country’s largest carmaker, jumped 2.8 percent to 1,220.55 rupees and motorcycle-maker Hero MotoCorp Ltd. (HMCL) gained 1.9 percent to 2,064.75 rupees.

ITC jumped 2.7 percent to 258.40 rupees. Larsen & Toubro advanced 2 percent to 1,417 rupees, the most since June 29. Tamco Switchgear, its Malaysian unit, bought Henikwon Corp., a busduct-systems maker, according to an exchange filing today.

HDFC Bank Ltd., India’s second-largest private lender, rallied 1.8 percent to a record 588.65 rupees. ICICI Bank Ltd. (ICICIBC), the largest private lender, gained 1.4 percent to 942.9 rupees.

JPMorgan Chase & Co. advised investors to stay invested in Indian banks’ stocks. The “strong” momentum will sustain in the second half of calendar year 2012, the brokerage said.

India VIX, which measures the cost of protection against losses in the S&P CNX Nifty Index, slid 4.8 percent to 17.83. The Nifty added 1.3 percent to 5,345.35, while its July futures settled at 5,358.15. The BSE-200 Index (BSE200) climbed 1.3 percent to 2,168.84. Combined trading volume on India’s top two exchanges was 842.8 million shares yesterday, compared with a 12-month daily average of 903.8 million.

Overseas investors bought a net $59.9 million of Indian stocks yesterday, taking their investment this year to $9.6 billion, according to the Securities & Exchange Board of India, the market regulator.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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