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India’s Nifty Futures Swing Between Gains, Losses on Cut

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July 6 (Bloomberg) -- Most Indian stocks declined, paring the benchmark index’s weekly advance, after interest-rate cuts in Europe and China failed to assure investors the moves will be enough to boost economic growth.

Infosys Ltd., India’s second-largest software exporter that gets 98 percent of its sales from abroad, paced declines among its peers. Jindal Steel & Power Ltd. slumped the most in a month after the Wall Street Journal reported the steelmaker halted work at its Bolivia iron-ore mine. The BSE India Sensitive Index lost 0.1 percent to 17,521.12 at close, paring the weekly advance to 0.5 percent.

The European Central Bank yesterday cut its benchmark rate to a record low and the People’s Bank of China pared borrowing costs for a second time in a month. ECB President Mario Draghi said the reductions may have only a “muted” effect, and the International Monetary Fund will lower its growth estimate for the global economy, Managing Director Christine Lagarde said.

“Nothing has been solved; instead the problems have once again been postponed,” Marc Faber, author of the Gloom, Boom & Doom report, told Bloomberg UTV today. “The main problem in Europe, and other western democracies including the U.S. and Japan in the east, is too much debt. I don’t think there is any real solution.”

Indian stocks also declined as the rupee weakened for a third day as the most-accurate forecaster for the currency said it will extend the past year’s declines as the country fails to meet targets for attracting global funds.

The rupee, which fell to a record 57.3275 a dollar on June 22, lost 0.8 percent to 55.4175 at 4:45 p.m., paring the weekly gain to 0.4 percent.

‘Too Much Battling’

Asia’s worst performer in the past year, the rupee will fall 6.1 percent in three months to 58.5 a dollar, according to Credit Suisse Group AG, which had the closest estimates in the last six quarters as measured by Bloomberg Rankings.

“My principal concern is that the currency will continue to depreciate over time, the fiscal deficit is not going to be addressed, that there is not sufficient liberalization in the economy and too much battling by the government,” Faber said.

The Sensex has risen 3.6 percent since June 26 when Prime Minister Manmohan Singh decided to lead the country’s finance ministry after Pranab Mukherjee quit to vie for the presidency. Singh, 79, told the Hindustan Times in an inteview published today that lowering the fiscal deficit, reviving investment in mutual funds and the insurance sector, cutting red tape and boosting infrastructure were among his top priorities.

“Investors are awaiting visible signs of action from the government,” K.K. Mital, a fund manager at Globe Capital Market Ltd., said by phone from New Delhi. “They are cautious. The earnings season will be keenly watched.”

Credit Rating

Singh is under pressure to support an economy expanding at the weakest pace in nearly a decade as policy gridlock deters investment and Europe’s debt crisis hampers exports. The nation faces becoming the first BRIC country to lose its investment-grade credit rating, according to Standard & Poor’s and Fitch Ratings.

Tata Consultancy Services Ltd. and Infosys, two of India’s biggest software exporters, release results on July 12, marking a start to the earnings season for the June quarter.

Profits at the 30 Sensex companies will drop 14 percent to 1,273 rupees per share in the year to March, the most in three years, estimates compiled by Bloomberg show. Earnings for 30 percent of the companies in the index missed estimates in the March quarter, compared with 47 percent in the period ended December, the data show.

VIX Index

The S&P CNX Nifty Index on the National Stock Exchange of India lost 0.2 percent to 5,316.95 and its July futures settled at 5,327.20. The BSE 200 Index fell 0.3 percent to 2,161.40, ending an eight-day 4.6 percent rally.

India VIX, a gauge of options prices in the Nifty, lost 1.7 percent to 18.04. Combined volume on the nation’s top two bourses was 1.13 billion shares yesterday, 25 percent more than the 12-month daily average.

The Sensex has gained 13 percent this year and trades at 13.7 times estimated earnings, the highest level since April. That compares with the MSCI Emerging Markets Index’s 10.2 times.

Infosys lost 1.4 percent to 2,444.65 rupees. Wipro Ltd., the third-biggest, fell 0.9 percent to 392.15 rupees.

Jindal Steel tumbled 3.2 percent to 455.6 rupees. Tata Steel Ltd., the biggest producer of the alloy, decreased 0.7 percent to 448.25 rupees. Sterlite Industries (India) Ltd., the biggest copper and zinc maker, lost 1.8 percent to 107.55.

Overseas funds bought a net $82.9 million of Indian stocks yesterday, raising their investment this year to $9.5 billion, according to the nation’s market regulator. That’s a record for the period, according to data compiled 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: Darren Boey at dboey@bloomberg.net

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