India Nifty Futures Swing Between Gain, Loss on Deficit Policy
Indian (SENSEX) stock-index futures swung between gains and losses as the government took further steps to cut the fiscal deficit and amid signs corporate earnings are improving.
SGX S&P CNX Nifty Index futures for January delivery fell 0.2 percent to 6,090.5 at 10:07 a.m. in Singapore after rising as much as 0.2 percent. The underlying S&P CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. added 0.3 percent to 6,082.30 yesterday. The BSE India Sensitive Index, or Sensex, gained 0.3 percent to 20,101.82. The Bank of New York Mellon India ADR Index of U.S.-traded shares fell 0.3 percent.
India, the world’s largest bullion buyer, increased taxes on gold imports yesterday, extending measures to reduce a record current-account deficit that widened to $22.3 billion in the three months to Sept. 30 as a faltering global economy hurt exports. Only one out of 10 Sensex companies that have reported December-quarter earnings has trailed forecasts.
“Increasing diesel prices and gold duty are the right steps taken by the government to the cut the current account deficit,” U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai, said by phone yesterday. “Equity market investors will like the move but we don’t see a big rally in stock markets because valuations are high.”
The Sensex has gained 3.5 percent this year, extending last year’s 26 percent jump, as the government allowed refiners to increase diesel prices to cut the deficit. The gauge is trading at 15.9 times estimated earnings, the highest level since February. The MSCI Emerging Markets Index is valued at 11 times, according to data compiled by Bloomberg.
Shares of Cairn India Ltd. (CAIR), operator of the nation’s biggest oilfield on land, may be active after the company reported profit for the quarter ended Dec. 31 surged 48 percent after it increased production. Net income rose to 33.4 billion rupees ($623 million), beating the 30.7 billion-rupee median estimate of 31 analysts surveyed by Bloomberg.
Hindustan Unilever Ltd., India’s biggest home-products maker, may report quarterly net income increased 18 percent to 8.9 billion rupees, according to the median of 30 analyst estimates.
“While the undertone remains bullish, the indices appear to be consolidating,” Amar Ambani, head of research at brokerage IIFL Ltd, said by e-mail yesterday. “Corporate results have brought in some cheer but the movement seems restricted to select counters.”
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