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India’s Nifty Futures Signal Stocks to Rise for Second Day

July 10 (Bloomberg) -- Indian stock-index futures gained, signaling benchmark indexes may rise for a second day.

SGX CNX Nifty Index futures for July delivery rose 0.4 percent to 5,877 at 10:42 a.m. in Singapore. The underlying CNX Nifty Index gained 0.8 percent to 5,859 yesterday. The S&P BSE Sensex rose 0.6 percent to 19,439.48. The Bank of New York Mellon India ADR Index of U.S.-traded shares added 1 percent.

Indian stocks advanced yesterday as the rupee rebounded from a record low after regulators took steps to curb speculation in the derivatives market. The currency slid to an unprecedented 61.2125 per dollar the previous day on concern the U.S. will cut stimulus that spurred inflows to emerging markets. Minutes of the Federal Reserve’s June meeting are due today.

“For the market, it all again depends on how the dollar-rupee moves this week,” Nagji K Rita, chairman of Inventure Growth & Securities Ltd., wrote in an e-mail yesterday.

The Reserve Bank of India barred banks from proprietary trading in currency futures and exchange-traded options, it said on its website on July 8. A weaker rupee stokes inflation by raising the cost of India’s imported oil, limiting the central bank’s ability to cut interest rates, and threatens to increase costs for companies facing at least $20 billion in foreign debt repayments in the coming year.

The Sensex has dropped 3.1 percent since May 22, when Fed Chairman Ben Bernanke said the central bank will slow stimulus if the U.S. economy shows sustainable improvement. The comments spurred global funds to sell emerging-market assets.

Fund Outflows

Foreign investors sold a net $1.76 billion of Indian shares in June, the highest since August 2011, according to data from regulators. They sold a net $39 million of shares on June 8, the data show.

The Sensex has gained 0.1 percent this year and trades at 13 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.6 times.

Deutsche Bank AG on July 8 cut its year-end Sensex target to 21,000 from 22,500, citing prospects for the tapering of Fed’s bond-buying program, a slowdown in China and a weak rupee. China’s exports and imports both unexpectedly declined in June, data released in Beijing today showed.

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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