India’s Nifty Stock-Index Futures Advance Before Growth Report
Indian (SENSEX) stock-index futures gained, signaling benchmark indexes may rise a second day, before the government releases fourth-quarter economic growth data today.
SGX CNX Nifty Index futures for June delivery rose 0.2 percent to 6,137 at 9:54 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 0.3 percent to 6,124.05 yesterday. The S&P BSE Sensex added 0.3 percent to 20,215.40, heading for a 3.7 percent advance this month, the most since November. The Bank of New York Mellon India ADR Index of U.S.-traded shares increased 0.4 percent.
Data today may show gross domestic product increased 4.8 percent in the three months through March, according to the median of 33 estimates in a Bloomberg survey. That compares with 4.5 percent in the previous quarter, the slowest pace since 2009. Full-year growth may be 5 percent, the least in a decade, according to the survey.
“All eyes will be on the GDP data,” Kishor Ostwal, managing director of CNI Research (India) Ltd., said by phone yesterday. “Given that the overall earnings were good and the foreign inflows remains strong, the downside is limited.”
Overseas investors bought $173 million of local stocks on May 29, taking this year’s inflows to $14.9 billion, a record for the period and the most after Japan among 10 Asian markets tracked by Bloomberg.
Shares of Suzlon Energy Ltd. (SUEL), the wind-turbine maker behind India’s biggest convertible-bond default, may be active after the company reported a record quarterly loss as the business stalled under mounting debts.
Real estate developer Unitech Ltd. (UT) may move after the company posted a fourth-quarter profit of 303.3 million rupees, compared with the 918 million-rupee estimate of analysts.
Net income at just eight, or 27 percent, of the 30 companies in the Sensex have missed forecasts for the March quarter, compared with 43 percent in the three months ended Dec. 31 and 40 percent in the previous two quarters, according to data compiled by Bloomberg.
“We have seen the worst of the earnings cycle downgrade and it’s pretty typical for the markets to turn three to six months before the earnings downgrades turn,” Adrian Mowat, chief Asian and emerging-market strategist at JPMorgan Chase & Co., told Bloomberg TV India yesterday. “We’re entering a sweet spot. We had a period of time where Indian growth was poor and inflation was high, and now that poor growth is translating into less inflation the central bank has a lot of flexibility to cut rates.”
‘Cause for Concern’
Reserve Bank of India Governor Duvvuri Subbarao lowered the repurchase rate to 7.25 percent from 7.50 percent on May 3, the third straight quarter-point cut, part of a wave of monetary easing this month from Asia to Europe, as inflation eased to a 41-month low in April.
Still, Subbarao said yesterday that retail inflation remains elevated, and flagged the challenges to the nation from a record current-account deficit and slowing economic growth.
“Investment growth has decelerated,” Subbarao said, adding “today’s investment is tomorrow’s production capacity.” The economic picture is “a cause for concern,” he said.
The Sensex has risen 4.1 percent this year, reaching the highest level in more than two years on May 17, as monetary easing by global central banks increased flows to emerging markets.
The Sensex is valued at 13.9 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.4 times, data compiled by Bloomberg show.
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