Indian (SENSEX) stock-index futures swung between gains and losses after the benchmark index fell the most in more than two months yesterday.

SGX CNX Nifty Index futures for November delivery added 0.1 percent to 6,031 at 10:32 a.m. in Singapore after dropping as much as 0.2 percent. The underlying CNX Nifty (NIFTY) Index lost 2 percent to 5,999.05 yesterday. The S&P BSE Sensex also declined 2 percent, the most since Sept. 3. The Bank of New York Mellon India ADR Index of U.S.-traded shares slid for a third day, losing 1.5 percent.

The Sensex slumped yesterday as the rupee fell the most in a week after the U.S. Federal Reserve signaled monetary stimulus may be reduced in coming months. The Fed’s $ 85 billion of monthly bond-buying has helped fuel inflows into Indian stocks this year.

Banking stocks may be active today. Rising bad loans at Indian lenders remain “a major challenge” amid a slowdown in Asia’s third-largest economy, according to a Reserve Bank of India report yesterday.

Nonperforming loans rose to 986 billion rupees ($ 15.7 billion) at the end of March, from 652 billion rupees a year earlier, as more debtors struggled to pay. India’s economy is forecast to grow at the slowest pace in more than a decade in the year ending March 2014.

The S&P BSE Bankex index tumbled 2.5 percent yesterday, the most since Oct. 15.

‘Eroding Profit’

“The banking sector is facing a combination of weakening asset quality, eroding profit and declining capital,” Fitch Ratings wrote in a report yesterday. “Nonetheless, these factors are likely to have only a moderate effect on the banking sector’s ability to supply credit to the economy.”

Still, Indian stocks will lead the next cycle of gains in stocks, along with South Korea and China, according to a Credit Suisse Group Inc. report today. Elections next year “could act as a catalyst to boost nominal gross domestic product growth,” the report said.

International investors have bought a net $ 17.2 billion of Indian shares this year, the highest after Japan among 10 Asian markets tracked by Bloomberg.

The Sensex has gained 4.1 percent this year and trades at 13.2 times projected 12-month profits, the cheapest since August. The MSCI Emerging Markets Index is valued at 10.5 times estimated earnings.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net