India’s Nifty Futures Drop After Benchmark Gains to 1-Week High

Indian stock-index futures dropped after benchmark indexes rose to a one-week high yesterday.

SGX CNX Nifty Index futures for January delivery fell 0.2 percent to 6,312 at 10:11 a.m. in Singapore. The underlying CNX Nifty Index added 0.2 percent to 6,313.80 yesterday, the highest close since Jan. 16. The S&P BSE Sensex (SENSEX) gained 0.2 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares advanced 1.2 percent.

India’s central bank should adopt a 4 percent target for consumer-price-inflation when it sets interest rates, a panel appointed by Reserve Bank of India Governor Raghuram Rajan wrote in a report yesterday. The RBI meets for its next policy review on Jan. 28.

“The immediate implication for monetary policy could be a front-loaded 25 basis-points hike in the repurchase rate at the January policy meeting, given that current headline inflation is significantly above the 12-month target,” Tushar Poddar and Vishal Vaibhaw, analysts at Goldman Sachs Group Inc., wrote in a report dated today.

Wholesale price increases eased to 6.16 percent in December from a year earlier, government data showed last week, from a 14-month high of 7.52 percent in November. Consumer prices climbed 9.87 percent, the least in three months, a separate report showed.

Inflation Battle

Rajan has made the battle against consumer-price increases a priority since taking over the RBI in September. He raised borrowing costs twice before leaving the benchmark repurchase rate unchanged at 7.75 percent at the last review on Dec. 18. The rate will be held again at next week’s meeting, according to all 14 economists in a Bloomberg survey.

Larsen & Toubro Ltd. (LT), India’s largest engineering company, may report today that third-quarter profit rose to 11.7 billion rupees ($189 million) from 11.2 billion rupees a year earlier, according to the median estimate of 33 analysts in a Bloomberg survey.

Housing Development Finance Corp. (HDFC), India’s biggest mortgage lender, may say quarterly earnings rose 12 percent from a year earlier to 12.8 billion rupees, according to 31 analysts surveyed by Bloomberg.

All six Sensex companies that have reported profits for the quarter ended Dec. 31 so far have beaten or matched forecasts.

International investors bought a net $65.4 million of domestic shares on Jan. 20, data compiled by Bloomberg show. They invested $20 billion last year, the most in Asia after Japan, and $24.6 billion in 2012, the data show.

The Sensex has risen 0.4 percent this year and trades at 13.2 times projected 12-month profits, compared with the five-year average of 14.4 times. The MSCI Emerging Markets Index is valued at 9.3 times forward earnings.

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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