Nifty Futures Advance as Rupee Forwards Strengthen on RBI Easing

Indian (SENSEX) stock-index futures jumped after the central bank relaxed liquidity curbs for the financial system. Rupee forwards gained.

SGX CNX Nifty Index futures for October delivery rose 0.8 percent to 5,979 at 9:31 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index fell less than 0.1 percent to 5,906.15 yesterday. The S&P BSE Sensex declined 0.1 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 0.2 percent. One-month rupee forwards rose 0.3 percent to 62.26 per dollar.

Reserve Bank of India Governor Raghuram Rajan cut the marginal standing facility rate to 9 percent from 9.5 percent, the second reduction in a month, as the rupee’s stabilization gives the authority scope to relax cash curbs on the nation’s lenders. The rupee has climbed about 11 percent versus the dollar since reaching a record low in August.

“Markets have turned positive recently on easing of liquidity concerns and also due to the appreciation of the rupee,” Dipen Shah, head of private client group research at Kotak Securities Ltd., wrote in an e-mail yesterday.

Rajan’s predecessor Duvvuri Subbarao increased both the marginal standing facility and bank rates by 200 basis points in July to try and contain the drop in the currency, which had been weighed down by a current-account deficit, inflation and slower economic growth.

Global investors bought a net $89.9 million of local stocks on Oct. 4, taking this year’s purchases to $13.7 billion, data from the regulator show. That’s the second-biggest inflow among 10 Asian markets tracked by Bloomberg, after Japan.

The Sensex has risen 2.4 percent this year and is valued at 13.7 times projected 12-month profits, compared with the five-year average of 14.1 times. The MSCI Emerging Markets Index is trading at 10.5 times.

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

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