Indian Stock Futures Drop After Valuations Climb to 9-Month High

Indian (SENSEX) stock-index futures dropped after benchmark indexes rose to a seven-week high yesterday, driving valuations to the highest level since October.

SGX CNX Nifty Index futures for July delivery fell 0.2 percent to 6,041 at 9:54 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index advanced 1.1 percent to 6,038.05 yesterday, the highest close since May 30. The S&P BSE Sensex rose 0.9 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares jumped 2.5 percent, the most in a week.

The Sensex trades at 14 times projected 12-month earnings, the most since Oct. 9. That compares with the MSCI Emerging Markets Index’s 10 times. Hindustan Unilever Ltd. (HUVR) is the 30-member index’s most expensive stock, trading at 40.2 times estimated profit after advancing to a record yesterday.

“The markets have been hugely skewed in terms of performance,” Navneet Munot, chief investment officer in Mumbai at SBI Funds, a unit of India’s largest bank that manages $10.1 billion in assets, told Bloomberg TV India yesterday. “Some consumer and technology stocks are at an all-time high, some stocks have fallen to record lows in terms of price and valuation. On one side there is overvaluation and on the other, there is a lot of value one can find.”

Tata Consultancy

Shares of Tata Consultancy Services Ltd. (TCS), Asia’s largest computer-services exporter by market value, may be active after the company reported first-quarter profit that beat estimates. Net income rose 16 percent from a year earlier to 38 billion rupees ($637 million) in the three months ended June 30, surpassing the median 37.5 billion-rupee forecast of 40 analysts surveyed by Bloomberg.

Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, may report today first-quarter net income of 52.6 billion rupees, according to the median of 31 analyst estimates compiled by Bloomberg.

Mortgage lender Housing Development Finance Corp. (HDFC) may report profit of 11.9 billion rupees, according to 32 analysts in a Bloomberg survey.

Bajaj Auto Ltd. (BJAUT), the nation’s second biggest two-wheeler maker, may announce first-quarter net income of 7.41 billion rupees, 39 analysts forecast.

Global investors sold $0.7 million of local shares on July 17, paring this year’s inflows to $12.35 billion, data compiled by Bloomberg show. Overseas funds have sold a net $982 million of Indian stocks this month, the most among 10 Asian markets tracked by Bloomberg, extending June’s $1.8 billion sell-off.

The Sensex has gained 3.6 percent this year. Its 30-day volatility index, a gauge of price swings, climbed to 20.2 yesterday, the highest level since April 2012.

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

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.