India’s Nifty Futures Rise as Foreign Funds Extend Record Buying

Indian stock-index futures gained as overseas funds extended this year’s record purchases of the nation’s equities.

SGX CNX Nifty Index futures for May delivery rose 0.2 percent to 5,991.5 at 9:51 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 0.5 percent to 5,971.05 yesterday, extending a three-week rally. The S&P BSE Sensex Index added 0.5 percent to 19,673.64. The Bank of New York Mellon India ADR Index of U.S.-traded shares increased 0.6 percent.

Foreign funds bought a net $196 million of local shares on May 3, taking their net investment in stocks this year to $11.8 billion, a record for the period according to data compiled by Bloomberg. Funds bought a net $802 million worth of equities last week, the most in 12 weeks, the data show.

“Global liquidity has increased further and this huge liquidity is going to last for some time,” Raamdeo Agrawal, joint managing director at Motilal Oswal Financial Services Ltd. in Mumbai, said in an interview with Bloomberg TV India yesterday.

Lower borrowing costs from Europe to the U.S. and Japan have stoked inflows into India. The European Central Bank trimmed rates to a record low last week and the Federal Reserve said it will keep buying $85 billion of bonds a month to stimulate the U.S. economy.

The Sensex capped a third week of gains on May 3, the longest run since December. The gauge has rebounded 7.9 percent since plunging to a seven-month low on April 9, as overseas investors stepped-up purchases of Indian equities amid optimism the Reserve Bank of India would cut interest rates at its May 3 policy review. While the RBI lowered borrowing costs that day, Governor Duvvuri Subbarao told Bloomberg TV India in a May 4 interview the possibility of further easing is “practically non-existent.”

The Sensex has advanced 1.3 percent in 2013 and is valued at 13.3 times projected 12-month profits, compared with a multiple of 10.5 times for the MSCI Emerging Markets Index. The Indian (SENSEX) gauge’s 50-day volatility, a measure of price swings, rose to the highest level since Aug. 8 yesterday.

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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