India Stock Futures Gain as Funds Continue Record Buying

Most shares on India’s benchmark stock index declined. GAIL India Ltd. (GAIL), the nation’s biggest natural-gas supplier, tumbled after the regulator cut tariff at one of its subsidiaries.

GAIL India dropped to a one-month low. Indraprastha Gas Ltd. (IGL), which sells natural gas in New Delhi, lost as much as half its value after the regulator cut rates for carrying the fuel in the nation’s capital. GAIL owns 22.5 percent of Indraprastha. Tata Motors Ltd. (TTMT), the largest truckmaker and owner of Jaguar Land Rover, rallied the most in a month.

The BSE India Sensitive Index (SENSEX), or Sensex, gained 0.1 percent to 17,241.98, according to preliminary closing prices at 3:30 p.m. in Mumbai. Three shares fell for every two that climbed on the 30-member stock gauge.

The gauge has risen 11 percent this year as foreign funds have poured a net $9.2 billion into stocks amid optimism the central bank will ease monetary policy to spur growth. Net inflows into emerging-nation equity funds have totaled $25.63 billion in 2012, compared with outflows of $18 billion in the year-ago period, EPFR Global said April 4.

India will be a “beneficiary of benign capital flows to emerging markets, although it will remain volatile because there will be some data point which will not be as expected,” Nirmal Jain, chairman of brokerage IIFL Ltd., told Bloomberg UTV today. “Unless something goes extra-ordinarily wrong with India we will see a continuous flow of money but it will not be as bullish as it was a few weeks ago.”

Expectations for interest-rate cuts that helped fuel this year’s rally have been tempered after Finance Minister Pranab Mukherjee projected record government borrowing to fill a gap in finances. He missed his deficit target by the most in three years and forecast the fiscal gap would narrow to 5.1 percent of GDP in the year from April 1, Mukherjee said in his budget speech on March 16. The central bank left the key interest rate unchanged at 8.5 percent at meeting on March 15. It next meets on April 17.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

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

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