India’s Nifty Futures Gain, Signaling Equities to Extend Rally

Indian (SENSEX) stock-index futures gained, signaling benchmark indexes may extend a rally from a three- month low.

SGX CNX Nifty Index futures for March delivery rose 0.4 percent to 5,817 at 10:12 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index jumped 1.5 percent to 5,784.25 yesterday, the biggest advance since Nov. 29. The S&P BSE Sensex index added 1.4 percent to 19,143.17. The Bank of New York Mellon India ADR Index of U.S.-traded shares climbed 1.7 percent.

The Sensex fell for five straight weeks through March 1, slumping to the lowest level since November on Feb. 28, as profits at companies from Tata Motors Ltd. (TTMT) to State Bank of India missed estimates for the December quarter and the economy grew at the weakest pace in almost four years.

“The market was oversold and it wasn’t unusual to see a pullback rally yesterday,” Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities Pvt., said by phone. “That is likely to be the nature of this market; we will see investors buy into dips. The Reserve Bank of India policy is the next big trigger.”

Weak economic growth may prompt the central bank to cut borrowing costs at its March 19 policy review, Abhay Laijawala, head of research at Deutsche Equities India Pvt., said in Mumbai on March 4. The RBI pared the repurchase rate by 25 basis points to 7.75 percent on Jan. 29, the first reduction in nine months.

Slowing Growth

The nation’s economy expanded 4.5 percent from a year ago in the final three months of 2012, the weakest pace in almost four years, government data showed last week. Earnings at 43 percent of Sensex companies missed estimates in the three months through Dec. 31, compared with 40 percent in the previous two quarters, data compiled by Bloomberg show.

The measure trades at 13.5 times projected 12-month profits, compared with 14.3 times on Jan. 25, when it climbed to a two-year high, data compiled by Bloomberg show.

India’s service industries expanded at a slower pace in February, a private survey showed yesterday, as slowing growth damped demand. The purchasing managers’ index fell to 54.2 from 57.5 in January, HSBC Holdings Plc and Markit Economics said in a statement today. A number above 50 indicates growth.

Services account for about 58 percent of gross domestic product.

Shares of Mahindra & Mahindra Ltd. (MM), India’s biggest sport- utility vehicle makers, may be active after the company received notice of a strike by an employees union at its Nashik plant if their demands are not settled by March 11. Production was stopped for three hours yesterday.

Overseas funds bought a net $22 million of Indian stocks on March 4 as money returned to local shares after the biggest net sale in about a year on Feb. 28, data compiled by Bloomberg show. Foreigners have bought a net $8.4 billion worth of shares so far this year, a record for the period.

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net

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

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