Indian stock-index futures gained after the Indian government allowed oil companies to raise diesel prices, and as overseas investors extended record purchases of domestic shares.
SGX S&P CNX Nifty Index futures for January delivery rose 0.3 percent to 6,071.5 at 10:49 a.m. in Singapore. The underlying S&P CNX Nifty (NIFTY) Index added 0.6 percent to 6,039.20 yesterday. The BSE India Sensitive Index, or Sensex, gained 0.7 percent to 19,964.03. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 0.8 percent.
India’s move to raise diesel prices steps up efforts to curb fuel subsidies and tackle the widest budget gap among the largest emerging markets. The decision extends an economic- policy overhaul since September that seeks to stem slowing economic growth, avert a credit-rating downgrade and spur investment. Overseas funds have bought a net $2.18 billion of Indian shares this year, a record for the period.
“Consistent buying of local stocks by overseas investors is boosting market sentiment,” Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. Ltd. in Mumbai, said by phone yesterday. “Most overseas flows coming from exchange- traded funds are on expectation the government will be able to phase out subsidies on petroleum products.”
Indian state-run refiner Indian Oil Corp. (IOCL) raised diesel prices nationwide by 0.45 rupee a liter starting today. Bharat Petroleum Corp. and Hindustan Petroleum Corp. have previously followed Indian Oil price increases.
State refiners lost 738.2 billion rupees ($13.6 billion) from selling diesel below cost in the nine months ended Dec. 31. India plans to trim its subsidy bill for food, fuel and fertilizer to 1.9 trillion rupees, or 2 percent of gross domestic product, this financial year.
Standard and Poor’s and Fitch Ratings lowered their outlooks on India’s credit rating, currently at the lowest investment-grade level, to negative in 2012 and said the nation’s large fiscal deficits and debt are constraining ratings.
Shares of Hero MotoCorp Ltd. (HMCL), India’s biggest motorcycle maker, may be active after the company reported yesterday net income of 4.88 billion rupees for the quarter ended Dec. 31, lower than the median estimate of 5.93 billion rupees in a Bloomberg survey of analysts.
One out of four Sensex companies that have reported earnings for the quarter ended Dec. 31 has trailed forecasts. That compares with 40 percent of index companies in the three months ended September, the same as for the June quarter, data compiled by Bloomberg show.
The Sensex has gained 2.7 percent this year and trades at 15.8 times estimated earnings, the highest reading since February. The MSCI Emerging Markets Index is valued at 10.9 times, according to data compiled by Bloomberg.
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