India’s Nifty Futures Drop as Inflation Accelerates, Rupee Falls

Indian (SENSEX) stock-index futures dropped after consumer-price inflation accelerated more than forecast and industrial output growth missed estimates.

SGX CNX Nifty Index futures for November delivery fell 0.6 percent to 6,028 at 9:35 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index lost 1 percent to 6,018.05 yesterday, the lowest level since Oct. 9. The S&P BSE Sensex declined 1 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares lost 1.5 percent. The rupee weakened to an eight-week low, raising the prospect of further interest-rate increases by the central bank, and bonds fell.

Consumer (INFUTOTY) inflation accelerated to 10.09 percent last month, data released after markets closed yesterday showed. India has the fastest price growth among a basket of 17 Asia-Pacific economies tracked by Bloomberg, even as economic growth slows to a decade low, hurting the roughly 800 million Indians living on less than $2 per day. Industrial output rose 2 percent in September from a year earlier, less than the median estimate of 3.5 percent in a Bloomberg survey of 37 economists.

“Inflation data doesn’t look good when the rupee is weakening and bond yields are rising,” Vaibhav Sanghavi, a director at Ambit Investment Advisors Pvt in Mumbai, said in an interview yesterday. “Expect to see a negative reaction in stock markets.”

Reserve Bank of India Governor Raghuram Rajan has made the fight against inflation a priority since taking charge in September. Rajan boosted the benchmark repurchase rate to 7.75 percent from 7.5 percent last month.

Earnings Reports

Shares of Reliance Communications Ltd. (RCOM), India’s third-largest mobile phone company by market value, may move. The company reported second-quarter profit jumped more than sixfold to 6.75 billion rupees ($106 million), beating estimates.

Coal India Ltd., Cipla Ltd., Oil and Natural Gas Corp., State Bank of India, Mahindra & Mahindra Ltd., Sun Pharmaceutical Industries Ltd. and Tata Steel Ltd. announce earnings today.

Net incomes at 17 of the 22 companies in the Sensex that have posted results exceeded analyst estimates, according to data compiled by Bloomberg. About 47 percent of the 30 companies in the index missed forecasts in the previous quarter.

The Sensex has fallen every day since climbing to a record in a special Diwali trading session on Nov. 3. The rupee has dropped 4.1 percent in the past month.

The Sensex has gained 4.4 percent this year and trades at 13.4-times projected 12-month earnings, the cheapest in more than two months. The MSCI Emerging Markets Index is valued at 10.6 times forecast profits.

Global funds bought a net $49.1 million of local shares on Nov. 11, a 26th day of purchases, the longest consecutive inflow since the 35 days though Feb. 15. That took this year’s inflows to $16.6 billion, the most after Japan among 10 Asian markets tracked by Bloomberg.

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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