India's Nifty Futures Gain After Indexes Rise to Four-Week High

  • Jet Airways, SpiceJet at multi-year highs on air travel boom
  • Investors focussed on stocks linked to rising urban demand

India’s mid-cap stocks climbed to a five-week high, helped by hotel and travel-related companies, even as the benchmark index fell from its highest level in nearly a month.

Indian Hotels Co., which operates the Taj Group of hotels, jumped the most in 21 months, while rival EIH Ltd. rallied to an 11-month high. Jet Airways India Ltd. surged to more than a two-year high and SpiceJet Ltd. rose to its highest price in almost five years. JK Tyre & Industries Ltd. surged the most in three months, while Apollo Tyres Ltd. climbed to a one-month high.

The Nifty MidCap Index climbed for a ninth day to its highest level since Oct. 27, the longest run of advances since April. The S&P BSE Sensex slid 0.2 percent after changing direction at least five times. Mid-cap stocks were gaining as domestic investors focused on companies that were likely to benefit from a recovery in economic growth, according to R. Sreesankar, head of institutional equities at Mumbai-based Prabhudas Lilladher Pvt.

“You will see the consumption theme to continue to do well from the proposed salary increases in government employees straight away,” Sreesankar said in an interview with Bloomberg TV India. “The consumption theme will play out, more than the capex cycle spurring the domestic recovery.”

Wage Stimulus

A government panel recommended a 24 percent increase in the salaries and allowances of federal employees, a move that may boost consumption in Asia’s third-largest economy. The pay changes will cost 1.02 trillion rupees in the year starting April 1 if the proposal is accepted. The economy grew 7.4 percent in the September quarter, beating estimates, as Prime Minister Narendra Modi boosts infrastructure spending, data showed Monday.

The Sensex has fallen 5 percent this year and is headed for its first annual loss in four years. Foreign fund inflows of $3.2 billion into Indian shares so far since Jan. 1 is the smallest in more than a decade, as a slowdown in China curbed demand for emerging market assets and the euphoria over Modi’s economic agenda waned.

International investors sold a net $22 million of stocks on Dec. 1 after pulling $1.1 billion in November, the biggest withdrawal since August.

Chennai Floods

Meantime, the worst deluge in a century in India’s southern state of Tamil Nadu paralyzed Chennai, closing offices, automobile factories and the airport in a city with about as many people as Singapore. The city is a hub for many manufacturers, including Ashok Leyland Ltd., Hyundai Motor Co., and Renault SA.

TVS Motor Co., which makes motorcycles and scooters and is based in Chennai, dropped 5 percent, the most since Aug. 24, after saying the rains in the past three weeks adversely affected production and sales. Natco Pharma Ltd., which shut down a plant temporarily due to flooding, is set for its biggest weekly loss since April. Truckmaker Ashok Leyland extended a two-day, 4 percent retreat.

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