India’s Nifty Futures Gain on Valuations Before Futures Expiry

Indian (SENSEX) stock-index futures gained before the expiry of monthly derivatives contracts today, and as declining valuations lure investors.

SGX CNX Nifty Index futures for June delivery increased 1.1 percent to 5,642 at 9:49 a.m. in Singapore. The most-active July contract climbed 1.2 percent to 5,648.5. The underlying CNX Nifty (NIFTY) Index fell 0.4 percent to 5,588.70 yesterday. The S&P BSE Sensex lost 0.4 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares dropped 1.1 percent.

The Sensex has dropped 8.5 percent since climbing to a 19-month high on May 17, sending the index to a two-month low yesterday and valuations to 12.4 times projected 12-month earnings, near the lowest level since April. Indian derivatives contracts expire on the last Thursday of every month.

“We expect a rebound in Indian equities as valuations look attractive,” Jaideep Bhattacharya, managing director at Mumbai-based Baroda Pioneer Asset Management Co., which has 80 billion rupees ($ 1.32 billion) of assets, said in an interview yesterday. “A lot of companies with low leverage, strong export potential and good corporate governance are trading cheap now.”

A decline in the rupee yesterday to a record low prompted concern that outflows of foreign money from Indian assets will accelerate.

Overseas investors are on course for the first monthly net sales of Indian stocks since May 2012. They pulled $ 221 million from domestic shares on June 25, an 11th day of net sales, the longest series of outflows since November 2011. Foreign funds have still purchased a net $ 13.6 billion this year, a record for the period, data compiled by Bloomberg show.

“We are through with the worst of the outflows, though that’s a non-consensus view because many people believe flows will accelerate from here,” Jeff Chowdhry, head of emerging-market equities at U.K.-based F&C Asset Management Plc., told Bloomberg TV India yesterday. “Because of the depreciation of the currency, the market for many sectors has become attractive for us as foreigners. Our dollars and pounds buy a lot more in the Indian stock market.”

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at

To contact the editor responsible for this story: Darren Boey at

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