Bloomberg News

India’s Nifty Futures Signal Stocks May Extend Last Week’s Rally

April 21, 2013

Indian (SENSEX) stock-index futures rose, signaling stocks may extend the biggest weekly increase in more than four months.

SGX CNX Nifty Index futures for April delivery added 0.4 percent to 5,814, at 10:19 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index rose 1.7 percent to 5,783.10 on April 18, while the S&P BSE Sensex index advanced 1.5 percent to 19,016.46. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 0.8 percent on April 19, when Indian markets were shut for a public holiday.

The Sensex climbed 4.2 percent last week as April 15 data showed wholesale prices slowed to a 40-month low in March. Stocks also rose as slumping oil and gold prices lowered import costs for commodities that contributed to a record current- account gap for the nation in the last quarter of 2012. India’s trade deficit shrank to $10.3 billion in March from $13.5 billion a year earlier, the government said on April 18.

“Positive momentum could remain for a while,” Amar Ambani, head of research at India Infoline Ltd., wrote in an e- mail. “The cool-off in inflation has renewed hopes of a rate cut.”

Finance Minister Palaniappan Chidambaram said a further cut in interest rates by the central bank would help revive economic growth, and flagged the possibility of bettering his target for the budget deficit. Chidambaram made the comments in an April 19 interview from Washington, where he was attending meetings of the International Monetary Fund and the World Bank.

Wipro Earnings

Wipro Ltd. (WPRO), the technology-services company controlled by billionaire Azim Premji, may move after reporting a 17 percent gain in fourth-quarter profit on April 19. Cairn India Ltd. and UltraTech Cement Ltd. are due to report earnings today.

Last week’s rally drove the Sensex’s valuation to 12.8 times projected 12-month profits, the highest level since April 2. The gauge is still down 2.1 percent this year amid concerns about the current-account deficit, slowing economic growth and the highest inflation rate among major emerging nations.

International investors bought a net $45.1 million of Indian shares on April 17, data compiled by Bloomberg show. Foreigners’ net equity investment in stocks this year is $10.3 billion, the data show. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg.

“Profit booking cannot be ruled out” this week given last week’s rally, Sanjeev Zarbade, vice president of private client group research at Kotak Securities Ltd., said by e-mail on April 18. “Investors need to be watchful of any event that would trigger risk aversion leading to flow of funds out of emerging markets including India.”

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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