India’s Nifty Stock Futures Drop on Cyprus Deposit-Tax Turmoil
SGX CNX Nifty Index futures for March delivery sank 0.8 percent to 5,847.5 at 10:40 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. fell 0.6 percent to 5,872.60 on March 15. The S&P BSE Sensex index tumbled 0.7 percent to 19,427.56, extending the weekly decline to 1.3 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares slid 0.6 percent to 1,119.89.
Euro finance ministers reached an unprecedented agreement on March 16 forcing depositors in Cypriot banks to share in the cost of the latest euro-zone bailout. The European Union accounted for 17.2 percent of India’s exports in the six months ended September 2011, according to the commerce ministry, making it India’s largest trading partner. The Reserve Bank of India meets for its next policy review tomorrow.
“We expect a selloff today driven by global sentiments on the back of the Cyprus issue,” A.K. Prabhakar, senior vice president for equity research at Anand Rathi Financial Services Ltd., said in an e-mail today. “We don’t expect a cut in interest rates or the reserve ratio tomorrow by the RBI.”
The RBI, balancing the risks of economic growth at a decade low with “stubborn” inflation, will probably cut interest rates by a quarter-percentage point tomorrow, swap contracts indicate.
RBI Governor Duvvuri Subbarao last week signaled the government’s deficit was less of an obstacle to rate cuts, saying that Finance Minister Palaniappan Chidambaram “firmly embraced” fiscal responsibility in his budget last month. He also said “sluggish” economic growth is likely to curb import demand and the trade deficit.
The Sensex is valued at 13.2 times projected 12-month profits, compared with 14.3 times on Jan. 25, when the gauge climbed to a two-year high, data compiled by Bloomberg show. That compares with the MSCI Emerging Markets Index’s 10.6 times.
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