India’s Nifty Futures Gain After Benchmark Rally, Rupee Advance

Indian (SENSEX) stock-index futures gained before the nation’s financial markets reopen after a public holiday yesterday. Rupee forwards advanced for a fourth day.

SGX CNX Nifty Index futures for September delivery rose 0.4 percent to 5,788 at 9:50 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 1.6 percent to 5,680.40 on Sept. 6, the highest level since Aug. 14. The S&P BSE Sensex increased 1.5 percent. The Bank of New York Mellon India ADR Index of U.S.- traded shares jumped 2.1 percent yesterday. The rupee strengthened to a one-week high of 65.25 per dollar on Sept. 6, while one-month rupee forwards gained to 64.75 today, the highest level since Aug. 26.

The Sensex climbed 3.5 percent last week, the most in more than four months, and the rupee rallied after new Reserve Bank of India Governor Raghuram Rajan announced plans to boost the financial sector and support a currency that slumped to a record low on Aug. 28. International investors bought the most Indian stocks in two months on Sept. 5, data from the market regulator show.

“Equity markets have reacted on cues from the currency markets,” according to Dipen Shah, head of private client group research at Kotak Securities Ltd. “The intentions and initiatives of the new RBI governor helped change sentiment on the rupee and stocks.”

Major Impact

Rajan announced plans on Sept. 4 to make it easier for banks to open branches and lend to non-state sectors of the economy, measures that JPMorgan Chase & Co. analysts say will have a “major long-term impact” on bank profits. The RBI will also provide swaps for banks’ foreign-currency deposits that Bank of America Merrill Lynch estimates will boost the nation’s reserves by $10 billion.

Foreign investors bought a net $167 million of domestic shares on Sept. 5, the most since July 1, boosting this year’s net inflow to $11.6 billion, the second-highest among 10 Asian markets tracked by Bloomberg. They pulled $3.7 billion from local equities in the three months to Aug. 31 as capital fled the country amid slowing economic growth, an unprecedented current-account deficit and a slumping currency.

The Sensex has retreated 0.8 percent this year in local currency terms and is valued at 13.7 times projected 12-month earnings, compared with the five-year average of 14.1 times, data compiled by Bloomberg show. It has lost 17 percent this year in dollar terms. The MSCI Emerging Markets Index trades at 10.4 times, the most since May 21.

The Sensex’s 30-day volatility index, a gauge of price swings, rose to 27.7 on Sept. 6, the highest level since November 2011.

Shares of Tata Motors Ltd. (TTMT) may be active after Jaguar, the Indian carmaker’s high-end British car brand, unveiled the C-X17 small sport-utility vehicle prototype in a bid to challenge Bayerische Motoren Werke AG for mainstream luxury-auto buyers.

Hindustan Zinc Ltd. (HZ) may move after the Business Standard cited unidentified bankers as saying they have advised Vedanta Resources Plc to raise its offer to acquire the Indian government’s 29.54 percent stake in the zinc miner by 10 percent.

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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