India’s Nifty Futures Gain on Fed After Sensex Snaps 6-Day Loss

Indian stock-index futures gained after the Federal Reserve trimmed stimulus while pledging to hold interest rates, and after India’s benchmark indexes rose yesterday for the first time in seven days.

SGX CNX Nifty Index futures for December delivery rose 0.6 percent to 6,301.5 at 9:39 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index climbed 1.3 percent to 6,217.15 yesterday. The S&P BSE Sensex added 1.2 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares jumped 2.4 percent.

The MSCI Asia Pacific Index advanced after the Fed said it will cut monthly bond purchases to $75 billion from $85 billion amid an improved outlook for the U.S. job market, and maintain borrowing costs at close to zero “at least as long as” unemployment exceeds 6.5 percent. Indian stocks snapped a six-day loss yesterday after the central bank unexpectedly refrained from increasing interest rates at policy meeting.

“It looks like yesterday’s rally could spill over to today,” Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services Ltd. (GBNP), wrote in an e-mail.

Reserve Bank of India Governor Raghuram Rajan kept the benchmark repurchase rate at 7.75 percent yesterday, citing indications that vegetable prices may fall, combined with a more stable exchange rate and lag effects from two rate increases since September. The RBI said it will act if inflation does not ease in the next round of data releases.

Accelerating Inflation

Wholesale prices rose in November at the fastest pace in 14 months and consumer prices gained jumped by the most since at least January 2012. A separate report showed industrial production contracted in October by more than economists predicted. Economic growth of 4.8 percent in the three months ended September was below 5 percent for a fourth quarter.

International investors bought a net $211 million of local shares on Dec. 17, data from the market regulator showed yesterday. That took this year’s inflows to $18.9 billion, the most in Asia after Japan, data from the market regulator show. Foreign funds were net buyers of $24.5 billion of Indian (SENSEX) stocks last year.

The Sensex has climbed 7.4 percent this year, the best performer among the four largest emerging markets, and trades at 13.5 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 10.4 times.

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

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net

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