Indian Nifty Futures Drop After Consumer Inflation Tops Forecast

Indian stock-index futures declined after consumer prices accelerated more than forecast and industrial production slowed.

SGX CNX Nifty Index futures for August delivery fell 0.3 percent to 7,730.5 at 9:40 a.m. in Singapore. The underlying CNX Nifty Index (NIFTY) surged 1.3 percent to 7,727.05 yesterday, the largest advance since June 30. The S&P BSE Sensex (SENSEX) jumped 1.4 percent, the most since June 6. The Bank of New York Mellon India ADR Index of U.S.-traded shares lost 0.2 percent.

Consumer prices rose 7.96 percent from a year earlier in July, compared with the median estimate of 7.4 percent in a Bloomberg survey, adding pressure on central bank Governor Raghuram Rajan to keep interest rates elevated. The highest borrowing costs among the region’s largest economies risk damping growth and jeopardizing the government’s budget-deficit target. Industrial production rose 3.4 percent from the previous year in June, compared with a forecast 5.6 percent gain and a revised 5 percent in May.

The inflation and factory data “shows there’s some gap between expectations and reality,” Kishor Ostwal, managing director at CNI Research Ltd., said by phone today. “We can see stocks giving up some gains.”

Rajan left borrowing costs unchanged at the RBI’s Aug. 4 policy meeting and cut the proportion of deposits banks must invest in government debt, allowing them to lend more. The RBI won’t hold rates “high any longer than necessary,” Rajan said.

Prime Minister Narendra Modi’s administration has prioritized curbing food costs as part of a sweeping agenda seeking to revive economic growth from near a decade low.

Earnings Reports

Coal India Ltd. (COAL), the world’s largest producer, reported yesterday after market hours that quarterly profit rose 8.1 percent from a year earlier to 40.3 billion rupees ($658 million). That compared with the median analyst estimate of 39.8 billion rupees.

Power-equipment maker Bharat Heavy Electricals Ltd. (BHEL) said net income for the three months ended June 30 tumbled 58 percent to 1.94 billion rupees, compared with 3.24 billion-rupee median estimate of 32 analysts in a Bloomberg survey.

Tata Steel Ltd. (TATA) may report today that quarterly profit declined 17 percent to 9.4 billion rupees, according to the median estimate of 24 analysts in a Bloomberg survey.

Oil & Natural Gas Corp. (ONGC), India’s largest state-owned oil explorer, may say first-quarter profit surged 46 percent to 58.5 billion rupees, according to 29 analysts surveyed by Bloomberg.

Twelve of the 25 Sensex companies that have announced results for the June quarter have beaten or matched forecasts. That compares with 60 percent in the previous three months.

Foreign investors sold $18.3 million of local stocks on Aug. 11, paring this year’s inflow to $12 billion, still the most among eight Asian markets tracked by Bloomberg.

The Sensex has jumped 22 percent this year and is valued at 15.2 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s multiple of 11.1.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Matthew Oakley, Chan Tien Hin

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