India’s Nifty Futures Gain, Signaling Stocks May Extend Rally

Indian (SENSEX) stock-index futures gained, signaling benchmark indexes may extend a rally to the highest in more than three months.

SGX CNX Nifty Index futures for May delivery rose 0.4 percent to 6,076 at 9:30 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 1.2 percent to 6,043.55 yesterday, its highest close since Jan. 30. The S&P BSE Sensex index added 1.1 percent. The Bank of New York Mellon India ADR Index of U.S.- traded shares jumped 1.6 percent to a one-month high.

Global stocks rose yesterday as corporate earnings beat estimates and central banks eased monetary policy to boost growth. The Reserve Bank of India cut borrowing costs on May 3, while European Central Bank trimmed rates to a record low this week, the U.S. Federal Reserve pledged to continue its bond- buying program and Australia’s central bank yesterday reduced its benchmark interest rate.

“Strength in global markets, the Indian central bank’s recent rate cut and a fall in commodity prices has boosted market sentiment,” Nidhi Saraswat, senior research analyst at Bonanza Portfolio Ltd., wrote in an e-mailed note yesterday. “Investors are showing steady confidence in the market even at higher levels.”

The Sensex has rebounded 9.1 percent since plunging to a seven-month low on April 9, as overseas investors stepped up equity purchases amid optimism the RBI would cut interest rates and a drop in gold and crude oil prices improved the government’s prospects of narrowing a record current-account deficit.

Foreign Flows

Foreign funds bought a net $170 million of local shares on May 5, extending their net investment in stocks this year to $12 billion, a record for the period, data compiled by Bloomberg show. Funds bought a net $802 million of Indian equities last week, the most since the period ended Feb. 8, the data show.

Profit at just two of the 12 Sensex companies that have reported March-quarter results so far has trailed analyst estimates, data compiled by Bloomberg show. That compares with 43 percent in the three months ended Dec. 31 and 40 percent in the previous two quarters.

Housing Development Finance Corp. (HDFC), India’s largest mortgage lender, may today report fourth-quarter net income of 15.2 billion rupees, compared with 13.1 billion a year earlier, according to the median of 31 analyst estimates in a Bloomberg survey.

The Sensex has advanced 2.4 percent in 2013 and trades at 13.7 times projected 12-month profits, compared with a multiple of 10.6 times for the MSCI Emerging Markets Index. The gauge’s 50-day volatility, a measure of price swings, rose to a nine- month high on May 6.

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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