India’s Stock-Index Futures Rise, Signaling Gains for Equities

Indian stock-index futures rose, signaling gains for equities.

SGX S&P CNX Nifty Index futures for December delivery added 0.2 percent to 5,861 at 9:46 a.m. in Singapore. The underlying S&P CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. lost 1.2 percent to 5,847.70 on Dec. 21. The BSE India Sensitive Index, or Sensex, fell 1.1 percent to 19,242. The gauge dropped 0.4 percent last week.

Stocks retreated last week amid concern U.S. lawmakers and President Barack Obama will fail to agree on a budget deal by year-end, thereby triggering more than $600 billion in tax increases and spending cuts. The Sensex has risen 25 percent this year, headed for its biggest annual jump since 2009, as government steps to open the economy to offshore investment lured foreign funds.

“We expect the markets to go up,” Kishor Ostwal, managing director of CNI Research Ltd., said in a phone interview. “The correction in the past two days has been sharp. It will give a buying opportunity to those investors who were waiting on the sidelines to invest. The U.S. fiscal cliff issue is likely to remain in focus over the next few days.”

Indian (SENSEX) markets will be closed tomorrow.

The Sensex is valued at 15.2 times estimated earnings, compared with the MSCI Emerging Markets Index’s 12 times, data compiled by Bloomberg show.

Overseas funds were net buyers of domestic stocks on Dec. 20, taking net purchases in 2012 to $23.2 billion, the highest among 10 Asian markets tracked by Bloomberg, excluding China, data compiled by Bloomberg show.

Net Sales

Indian mutual funds have been net sellers of stocks for five straight months even as foreign funds have been net buyers for six consecutive months, according to data compiled by Bloomberg.

The steady increase in the past six months “is giving mutual-fund investors a chance to exit,” Dhirendra Kumar, chief executive officer at Value Research India Pvt., which has been tracking funds for more than two decades, said in a phone interview from New Delhi. “Indian funds are a slave of investor action, and the redemption pressure is showing.”

Prime Minister Manmohan Singh’s administration, striving to avert a credit-rating downgrade and revive economic growth, ended two years of policy paralysis in September by opening the retail industry to overseas companies such as Wal-Mart Stores Inc. and cutting fuel subsidies.

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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