India’s Nifty Futures Advance on Gas Prices, U.S. Economic Data
Indian stock-index futures gained after the government agreed to double natural gas prices and as global stocks advanced on U.S. economic data.
SGX CNX Nifty Index futures for July delivery rose 1.7 percent to 5,774 at 10:29 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index surged 1.7 percent to 5,682.35 yesterday. The S&P BSE Sensex jumped 1.8 percent, paring its June loss to 6.6 percent, poised for the biggest monthly decline since November 2011. The Bank of New York Mellon India ADR Index of U.S.-traded shares advanced 2.1 percent.
Shares of Reliance Industries Ltd. (RIL) and Oil & Natural Gas Corp. (ONGC) may be active after India’s cabinet agreed to double the price of natural gas to $8.4 per million British thermal unit starting April 2014. Reliance and partner BP Plc have been seeking higher prices even as slumping domestic output forces the country to import expensive gas, contributing to a widening current account deficit and a weakening currency.
“The gas pricing is one of the biggest bullets the government has bitten,” Surya Narayan Nayak, an analyst at Networth Stock Broking Ltd., said by phone from Mumbai today. “This will boost foreign investment in the energy sector and reduce our dependence on oil imports. It’s very positive not only for companies like Reliance and ONGC but also for the rupee and market sentiment.”
Futures also rose as U.S. and Japanese data boosted the outlook for the global economy and Federal Reserve officials downplayed investor speculation they will curb stimulus soon. The MSCI Asia Pacific Index gained, heading for its biggest three-day advance since July.
The rupee strengthened the most in two weeks yesterday, rebounding from a record low, after a report showed the nation’s current-account deficit narrowed last quarter.
India’s current-account gap narrowed to 3.6 percent of gross domestic product in the March quarter from a record 6.7 percent in the preceding three months, the central bank said yesterday. The data’s release a day before expected was aimed at calming nerves after the rupee touched an all-time low on June 26, Yes Bank Ltd. said.
Overseas investors pulled $94 million from domestic shares yesterday, a 12th day of net sales and the longest run of outflows since March 2009, data compiled by Bloomberg show. Foreign funds offloaded a net $1.63 billion of Indian stocks this month through June 26, heading for the biggest monthly outflow since August 2011.
Foreigners have still bought a net $13.5 billion of Indian (SENSEX) stocks this year, a record for the period, the data show.
The Sensex has dropped 2.8 percent this year, reversing gains after reaching a two-year high May 17, as the prospect of reduced U.S. monetary stimulus prompted global investors to pull money from emerging-market assets. The gauge is valued at 12.6 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 9.7 times.
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