Bloomberg News

India’s Nifty Stock Futures Drop as Foreign Funds Extend Sales

April 04, 2013

Indian stock-index futures dropped, signaling benchmark gauges may extend a two-day slump, as overseas funds sold the nation’s shares on consecutive days for the first time since October.

SGX CNX Nifty Index futures for April delivery fell 0.3 percent to 5,567.5 at 9:41 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index slumped 1.7 percent to 5,574.75 yesterday, its lowest close since Nov. 20. The S&P BSE Sensex index slid 1.6 percent to 18,509.70. The Bank of New York Mellon India ADR Index of U.S.-traded shares lost 1.5 percent.

Foreign funds sold a net $62.8 million of Indian shares on April 3, a second day of net outflows, according to data from the market regulator. Overseas investors are paring this year’s record equity purchases as sales of goods from cars to cement drop amid the slowest annual economic growth in a decade, a record current-account deficit and the fastest inflation among major emerging nations.

“Foreign institutional investor flows have turned negative in the last couple of days,” Gautam Sinha Roy, vice president of equity strategy and product at Motilal Oswal Securities Ltd., wrote in an e-mailed note yesterday. “The Nifty has fallen below its long-term support level of 5,650.”

The Sensex has dropped 4.7 percent this year. The gauge is valued at 12.5 times projected 12-month profits, compared with this year’s peak of 13.8 times in January. The MSCI Emerging Markets Index trades at 10.3 times, the lowest level since November.

Record Deficit

India’s economy grew 4.5 percent from a year ago in the final three months of 2012, the weakest quarterly pace in almost four years. The statistics bureau predicts an annual expansion of 5 percent in the year ended March, the lowest in a decade.

The country’s current-account deficit widened to a record $32.6 billion in the three months ended Dec. 31, data showed on March 29. Meanwhile, an inflation rate that has stayed above the central bank’s 5 percent “comfort level” has limited Reserve Bank of India Governor Duvvuri Subbarao’s scope to reduce borrowing costs to revive economic growth.

Overseas investors have still bought a net $10.38 billion of Indian (SENSEX) stocks this year, a record for the period, according to data compiled by Bloomberg.

Infosys Ltd. (INFO), India’s second-largest software exporter, will report earnings on April 12, marking the start of the reporting season for the March quarter. Net income at about 43 percent of the 30 Sensex firms trailed forecasts in the three months ended Dec. 31, compared with 40 percent in the previous two quarters.

“Global equity markets are witnessing a period of consolidation but we don’t expect this weakness to extend,” Robert Aspin, a Singapore-based investment strategist at Standard Chartered Bank, said in an interview with Bloomberg TV India yesterday. “We are overweight on equities in the longer term 12-month view.”

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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