India’s Nifty Stock-Index Futures Advance After Rupee Rebounds

Indian (SENSEX) stock-index futures rose after the nation’s currency jumped the most in more than a year on Aug. 23.

SGX CNX Nifty Index futures for August delivery added 0.4 percent to 5,483.50 at 10:22 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. jumped 1.2 percent to 5,471.75 on Aug. 23. The Sensex increased 1.1 percent to 18,519.44. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 1.6 percent to 939.15.

The rupee rallied 2.1 against the dollar on Aug. 23, paring its second weekly loss. The currency has plunged 13.2 percent this year on concern the U.S. Federal Reserve will reduce monetary stimulus. Finance Minister Palaniappan Chidambaram said the nation won’t raise interest rates and that it’s too early to gauge the success of measures to stem declines in the rupee, the Times of India reported yesterday.

“We expect the markets to open positively, given the rupee’s sharp rise on Friday,” Kishor Ostwal, managing director at CNI Research Ltd., said in an interview yesterday. The finance minister’s comment on rates will “soothe the market nerves a bit.”

Asian nations are depleting foreign reserves as they seek to bolster their currencies while investors pull billions of dollars from the region. The Reserve Bank of India said on Aug. 22 that the nation’s economic and monetary policies must focus on preserving financial stability.

Interest Rates

The RBI began tightening monetary policy last month to slow depreciation in the currency. India’s central bank raised two interest rates on July 15 and restricted lenders’ access to cash. Policy makers also tightened limits on overseas investments by local companies and curbed gold imports. The central bank said Aug. 20 it will seek to limit increases in borrowing costs by buying long-dated government bonds.

The Sensex has lost 4.7 percent this year and trades at 13.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10 times.

Oil & Natural Gas Corp., India’s biggest energy explorer, may be active. Its unit ONGC Videsh Ltd. agreed to pay $2.64 billion to buy a 10 percent stake in a Mozambique gas field from Anadarko Petroleum Corp.

International investors sold a net $118 million of Indian shares on Aug. 21, data from the regulator show. That pared this year’s inflow to $12.1 billion, the data show.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

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

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