India’s Nifty Futures Drop After Consumer Inflation Accelerates

Indian stock-index futures fell after consumer prices quickened last month for the first time since November.

SGX CNX Nifty Index futures for April delivery declined 0.1 percent to 6,742 at 10:16 a.m. in Singapore. The underlying CNX Nifty Index decreased 0.6 percent to 6,733.10 yesterday. The S&P BSE Sensex (SENSEX) also dropped 0.6 percent. The Bank of New York Mellon India ADR Index of U.S.-traded shares lost 2.5 percent, the most since Feb. 3.

India’s consumer prices accelerated in March, data showed after markets closed yesterday, putting pressure on the central bank to keep interest rates elevated. Wholesale prices also climbed more than forecast. Persistent inflation has prompted Reserve Bank of India Governor Raghuram Rajan to raise the benchmark rate 75 basis points since taking over at the central bank in September.

“Broader underlying inflation pressures are still firm,” Leif Eskesen, chief economist for India and Asean at HSBC Holdings Plc, wrote in a note today. “The RBI is likely to remain in wait-and-see mode for now, but may eventually need to respond by tightening policy rates further to contain upside risks.”

The RBI meets for its next policy review on June 3.

The consumer-price index rose 8.31 percent from a year earlier, compared with a revised 8.03 percent in February, the Central Statistics Office said in New Delhi yesterday. The median estimate in a Bloomberg survey of 39 analysts had been for an 8.25 percent increase. Wholesale inflation was 5.7 percent in March, compared with a forecast for 5.3 percent.

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Climbing prices erode the purchasing power of about 800 million Indians who live on less than $ 2 a day and may hurt the Congress party’s effort to extend its 10-year rule in elections ending May 16.

Tata Consultancy Services Ltd. (TCS), India’s largest software services company, reports earnings for the quarter ended March 31 today. Profit may have surged 46 percent from a year earlier to 52.4 billion rupees ($ 870 million), according to a Bloomberg survey of 39 analysts.

Bharat Heavy Electricals Ltd. (BHEL), the country’s largest power-equipment maker, may report net income slumped to 17.4 billion rupees from 32.4 billion rupees a year earlier, according to the median forecast of 23 analysts surveyed by Bloomberg.

The Sensex has climbed 6.2 percent this year and trades at 14.2 times projected 12-month profits, in line with the average multiple over the past five years. The MSCI Emerging Markets Index has lost 0.3 percent in 2014 and is valued at 10.4 times.

Overseas investors sold a net $ 68.8 million of Indian shares on April 11, the first daily outflow in a month, according to data compiled by Bloomberg. That took this year’s purchases to $ 4.76 billion, the second-highest among eight Asian markets tracked by Bloomberg, after Taiwan.

To contact the reporter on this story: Santanu Chakraborty in Mumbai at

To contact the editors responsible for this story: Michael Patterson at Matthew Oakley, Phani Varahabhotla

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