Indian stock-index futures gained, signaling equities may rise from a one-week low, after U.S. Federal Reserve Chairman Ben S. Bernanke said the world’s biggest economy will continue to need stimulus.
SGX CNX Nifty Index futures for July delivery climbed 1.7 percent to 5,905 at 10:44 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index lost 0.7 percent to 5,816.70 yesterday. The S&P BSE Sensex fell 0.8 percent to 19,294.12, the lowest level since July 3. The Bank of New York Mellon India ADR Index of U.S.- traded shares closed little changed at 967.46.
“Highly accommodative” monetary policy will be needed for the “foreseeable future,” Bernanke said after U.S. markets closed. The Sensex lost 3.8 percent since May 22, part of a stock and bond rout spurred by Bernanke signaling the Fed’s asset buying program could be tapered. Foreign investors sold a net $ 981 million of Indian (SENSEX) equities from then to July 9, data from the markets regulator show.
“What was said yesterday should make people comfortable with equities investments,” David Gaud, a Hong Kong-based senior money manager at Edmond de Rothschild Asset Management, which oversees more than $ 157 billion, said by phone today. For India, “the one worry is the currency. The currency needs to stabilize before we see inflows into the market.”
The rupee’s slump to a record low of 61.2125 per dollar on July 8 stoked concerns that the cost of importing commodities will rise, limiting the central bank’s ability to cut interest rates. The rupee advanced for a second day yesterday, gaining 0.8 percent to 59.6550 per dollar, according to prices from local banks compiled by Bloomberg.
Infosys Profit
The Sensex’s drop since May dragged its valuation down by almost 4 percent to 13 times projected 12-month earnings, according to data compiled by Bloomberg. The gauge still trades 34 percent higher than the MSCI Emerging Markets Index’s multiple of 9.6 times.
Infosys Ltd. (INFO), India’s second-largest software exporter, may move before it posts first-quarter earnings tomorrow. The company will be the first of the 30 Sensex members to report.
“Infosys result will be keenly watched and that will set the tone for the markets,” Suniil Pachisia, vice president at Pratibhuti Viniyog Ltd., said in an interview yesterday.
Sensex companies’ profits may rise 5.8 percent in the three months ended June after two quarters of “near-zero” growth, Bank of America Corp. said in a July 3 report. Still, there could be a “risk of disappointment in earnings” because of a weak rupee, the report said.
International investors bought $ 27.8 million of Indian shares on July 9, taking this year’s inflows to $ 13.5 billion, the market regulator’s data show.
To contact the reporters on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net
To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net