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India’s Nifty Futures Decline as Funds Sell on Growth Concerns

Indian (SENSEX) stock-index futures dropped as overseas investors sold the nation’s shares amid concerns economic growth is weakening.

SGX CNX Nifty Index futures for April delivery fell 0.6 percent to 5,639.5 at 9:27 a.m. in Singapore. The underlying CNX Nifty (NIFTY) index slumped 1.3 percent to 5,672.90 yesterday, its steepest decline since March 19. The S&P BSE Sensex index lost 1.3 percent to 18,801.64. The Bank of New York Mellon India ADR Index of U.S.-traded shares slumped 1.8 percent, the biggest loss since March 12.

Foreign funds sold a net $5.5 million worth of local shares on April 2, only the fourth day of net sales this year, according to data from the market regulator. India’s economy grew at the slowest pace in a decade in the year ended March 31, according to government forecasts.

“Overseas investors are selling Indian stocks amid worries that the economic slowdown will worsen,” Nilesh Karani, assistant vice president of research at Magnum Equity Broking Ltd., said in a phone interview yesterday. “Automobile and cement sales numbers are pointing towards a protracted phase of low growth.”

Most automakers reported a decline in March sales from last year, according to figures reported by companies this week. Sales at Tata Motors Ltd. (TTMT), the owner of Jaguar and Land Rover luxury brands, slumped 28 percent from last year to 72,712 units in March, the company said on April 1. Motorcycle maker Bajaj Auto Ltd. (BJAUT) reported on April 2 that March sales dropped 10 percent. India’s manufacturing growth slowed to a 16-month low in March, according to a private report this week.

Cement Sales

Cement demand dropped for the first time in 12 years in the quarter ended Dec. 31 and earnings at producers may decline as much as 52 percent this year, Deutsche Bank wrote in a report last week.

The Sensex has dropped 3.2 percent this year and is valued at 12.7 times projected 12-month profits, compared the MSCI Emerging Markets Index’s 10.4 times.

The 30-stock Indian gauge plunged 5.3 percent in the past two months amid concern over slowing growth, a record current- account deficit and the highest inflation rate among major emerging nations. The gauge last week completed its first quarterly loss since the three months ended December 2011.

The statistics bureau predicts annual gross domestic product expansion of 5 percent in the year through March, after the economy grew 4.5 percent from a year ago in the final three months of 2012, the weakest quarter in almost four years.

‘Difficult Times’

India’s current-account deficit widened to a record $32.6 billion in the three months ended Dec. 31, data showed on March 29. Meanwhile, inflation that has stayed above the central bank’s 5 percent “comfort level” has limited Reserve Bank of India Governor Duvvuri Subbarao’s ability to slash borrowing costs to revive economic growth.

“We’re passing through difficult times,” Raamdeo Agrawal, joint managing director at Motilal Oswal Financial Services Ltd. (MOFS) in Mumbai, said in an interview with Bloomberg TV India yesterday. There isn’t “enough energy in the markets and mid- cap stocks have taken a serious beating.”

The S&P BSE Mid-Cap Index has plunged 12 percent this year, while the S&P BSE Small-Cap Index has tumbled 18 percent.

Still, overseas investors have bought a net $10.38 billion of Indian stocks this year, a record for the period, data compiled by Bloomberg show. Inflows last year totaled $24.5 billion, the most among 10 Asian markets tracked by Bloomberg.

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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