India’s Nifty Futures Drop After Indexes Decline Most in 6 Weeks

Indian (SENSEX) stock-index futures dropped after benchmark indexes fell by the most in six weeks yesterday.

SGX CNX Nifty Index futures for January delivery lost 0.8 percent to 6,207 at 9:44 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index fell 1.3 percent to 6,221.15 yesterday. The S&P BSE Sensex lost 1.2 percent to 20,888.33. The Bank of New York Mellon India ADR Index of U.S.-traded shares slumped 2.3 percent, the most since Oct. 8.

Indian manufacturing output weakened in December from the previous month, according to a survey released yesterday, prompting concerns about the pace of growth in Asia’s third-largest economy. International investors bought a net $1.2 million of Indian stocks on Jan. 1, compared with last year’s daily average of $84 million, data compiled by Bloomberg show.

“On activity from foreign institutional investors, we saw sell-side orders overtaking the buy side,” Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services Ltd., wrote in an e-mail. “Volatility is likely to pick up. A negative bias will remain an overhang on the markets till we see any meaningful news flow or triggers.”

HSBC Holdings Plc and Markit Economics’s Purchasing Managers’ Index for manufacturing in December fell to 50.7 from 51.3 in November. A reading of more than 50 signals expansion.

The data show that “growth remains moderate and struggles to take off due to lingering structural constraints,” Leif Eskesen, Singapore-based chief economist for India and Southeast Asia at HSBC Holdings Plc, wrote in a statement.

More Clarity

Reserve Bank of India Governor Raghuram Rajan said last month the central bank needs more clarity on economic data before deciding whether to raise borrowing costs again amid accelerating consumer prices and the slowest economic growth in more than a decade. The authority meets for its next policy review on Jan. 28.

India’s wholesale prices rose in November at the fastest pace in 14 months and consumer prices gained the most in data going back to January 2012. A separate report showed industrial production contracted in October by more than economists predicted. Gross domestic product expanded at less than 5 percent for a fourth straight quarter in the three months ended September.

Shares of Tata Motors Ltd. (TTMT) may be active after the automaker reported yesterday that December sales dropped 42 percent. Motorcycle maker Hero MotoCorp Ltd. (HMCL) and commercial vehicle manufacturer Ashok Leyland Ltd. (AL) also said monthly sales fell.

The Sensex is valued at 13.4 times projected 12-month earnings, compared with the five-year average of 14.4 times, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is trading at 10.3 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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