India’s Nifty Futures Climb on Outlook for Reforms, Fed Stimulus

India stock futures rose, signaling shares may snap a four-day slump, on speculation the impact of a rift in the ruling coalition may be limited, and as the U.S. Federal Reserve said it will maintain its stimulus program.

SGX CNX Nifty Index futures for March delivery gained 0.4 percent to 5,738.5 at 10:22 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index sank 0.9 percent to 5,694.40 yesterday, the lowest close since Feb. 28. The S&P BSE Sensex index fell 0.7 percent to 18,884.19. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 0.4 percent.

Finance Minister Palaniappan Chidambaram said yesterday the government will continue to pursue its economic reform agenda to bolster the economy, even after the withdrawal of its biggest ally on March 19 left it as many as 44 seats short of the halfway mark in the lower house of parliament. The MSCI Asia Pacific Index gained today after Chairman Ben S. Bernanke said the Federal Reserve won’t reduce its record monetary stimulus until unemployment drops further.

“At the moment there seems to be no danger to the survival of the government,” Manishi Raychaudhuri and Gautam Mehta, analysts at BNP Paribas SA, wrote in a note today. “It’s premature to conclude that the reform momentum will come to a complete standstill.”

Reform Agenda

Prime Minister Manmohan Singh is battling to refocus the government on its reform agenda amid slowing growth and after two years of criticism over alleged corruption. The withdrawal of the Dravida Munnetra Kazhagam party adds to the challenge of implementing policies to accelerate foreign investment, boost capital inflows and cut subsidies to spur an economy forecast to grow at the lowest pace in a decade this fiscal year.

“While administrative measures relating to boosting investment may continue, some politically difficult measures, such as a gradual increase in diesel and urea prices, may be affected by political uncertainty,” Raychaudhuri wrote.

Shares of Steel Authority of India, the nation’s second- biggest producer, may be active today, when the floor price is expected to be set for the government’s sale of 240 million shares tomorrow.

The Sensex (SENSEX) has slid 2.8 percent this year, the second worst-performing benchmark index among emerging Asian countries after Malaysia. The gauge declined 5.2 percent in February, its biggest monthly loss since May, as more company earnings missed estimates compared with the previous quarter and growth slowed.

The index trades at 12.8 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.5 times.

Overseas funds bought a net $27 million of local stocks on March 19, data from the regulator show. Foreign investors have purchased a net $9.81 billion of local equities this year, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion worth of shares last year, the most among 10 Asian markets tracked by Bloomberg.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

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

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