Bloomberg News

India’s Nifty Futures Decline on Profit Concerns as Growth Slows

April 15, 2013

Indian stock-index futures declined, signaling losses in benchmark indexes, on concerns that corporate profits will slow amid signs global economic growth is weakening.

SGX CNX Nifty Index futures for April delivery fell 0.6 percent to 5,520 at 10:15 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. advanced 0.7 percent to 5,568.40 yesterday. The S&P BSE Sensex index rose 0.6 percent to 18,357.80. The Bank of New York Mellon India ADR Index of U.S.-traded shares fell 2.3 percent to the lowest level since Nov. 21.

The MSCI Asia Pacific Index dropped for a second day as industrial production in China and manufacturing in the New York region grew less than forecast. Net incomes for the 30 companies on the S&P BSE Sensex may fall 0.8 percent from a year ago in the quarter ended March 31, according to estimates compiled by Bloomberg. That would be the first decrease since the three months ended June 2010.

“This quarter earnings are not likely to be encouraging,” Manishi Raychaudhuri, head of Indian (SENSEX) equity research at BNP Paribas Securities (Asia) Ltd., told Bloomberg TV India yesterday. “We may see relatively low or no earnings growth this year. During the results season, we may actually see markets drifting down more.”

Indian ADRs

Indian stocks traded in New York fell to the lowest level since November as slowing Chinese growth clouded the global economic outlook. Tata Motors Ltd. sank the most in two months and Infosys Ltd. dropped to a 2013 low.

Indian American Depositary Receipts slipped in “a global selloff, which is caused mostly by China’s weaker GDP data as well as soft U.S. data,” Gregory Lesko, managing director at Deltec Asset Management LLC, where he helps manage about $750 million, wrote in an e-mail.

Shares of jewelry makers and gold-loan companies like Gitanjali Gems Ltd. (GITG), Titan Industries Ltd. (TTAN), Muthoot Finance Ltd. (MUTH) and Manappuram Finance Ltd. (MGFL) may be active as a slump in gold prices to a two-year low is poised to revive jewelry demand among Indian housewives and brides before the wedding and festival seasons, according to Gitanjali and Rajesh Exports Ltd. (RJEX)

Gold extended the biggest decline since 1983 yesterday, deepening a bear market. The plunge has already revived interest among retail buyers, said Rajesh Mehta, chairman of Rajesh Exports Ltd.

Falling prices may discourage speculators and help India, the world’s biggest consumer, curb a record current-account deficit, according to Ambit Capital Pvt.

Reliance Earnings

Reliance Industries Ltd. (RIL), the second-biggest company on the Sensex by weighting, may report net income for the quarter ended March 31 grew to 55.3 billion rupees ($1.01 billion), from 42.4 billion a year earlier, according to the median estimate of 20 analysts in a Bloomberg survey.

The Sensex has dropped 5.5 percent this year amid concern over the weakest economic growth in a decade, a record current- account deficit and the highest inflation rate among major emerging nations. The index is valued at 12.3 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 times, the lowest level since November.

Foreign funds bought a net $17.1 million of Indian shares on April 12, data compiled by Bloomberg show. Overseas investors have bought a net $10.2 billion of Indian stocks this year, a record for the period, according to data compiled by Bloomberg. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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


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