Indian (SENSEX) stock-index futures were little changed after equities rebounded yesterday.
SGX CNX Nifty Index futures for August delivery fell 0.1 percent to 5,410.5 at 9:30 a.m. in Singapore. The underlying CNX Nifty (NIFTY) Index on the National Stock Exchange of India Ltd. jumped 2 percent to 5,408.45 yesterday, the most since July 11. The S&P BSE Sensex surged 2.3 percent to 18,312.94, climbing after its steepest four-day retreat since July 2009. The Bank of New York Mellon India ADR Index of U.S.-traded shares rose 1.5 percent.
The Reserve Bank of India said late yesterday the nation’s economic and monetary policies must preserve financial stability as the prospect of reduced U.S. Federal Reserve stimulus contributes to a slide in the rupee. Currency weakness could stoke already “high” consumer-price inflation, the Reserve Bank said in its annual report.
“Economic issues and weakness in the rupee against dollar continue to be the main concerns right now,” Nidhi Saraswat, senior research analyst at Bonanza Portfolio Ltd., wrote in an e-mail yesterday.
Finance Minister Palaniappan Chidambaram and Reserve Bank Governor Duvvuri Subbarao held coordinated briefings in New Delhi yesterday to try to soothe investors’ nerves. Excessive pessimism is unwarranted, economic expansion will pick up as the year progresses and the rupee’s drop has overshot appropriate levels, Chidambaram said.
India has no intention of imposing capital controls, the officials said. The Reserve Bank last week cut the amount Indian companies can invest abroad without approval and said residents can remit $ 75,000 per financial year, down from $ 200,000.
The currency touched an unprecedented low yesterday as concern the Fed will taper stimulus prompted investors to pull billions of dollars from emerging markets.
Hindalco Industries Ltd., India’s second-biggest aluminum maker, may move. The company is seeking improved terms on as much as $ 2.7 billion of debt as projects funded by the rupee loans start, said two people familiar with the talks.
Asia’s third-largest economy may expand 5.5 percent in the year to March 2014, according to central bank estimates. The 10-year average is about 8 percent. Car sales have dropped for nine straight months through July, while industrial production fell 2.2 percent in June.
Economic slowdown and a weak currency is hurting company earnings. Combined profits for the 30 companies in the Sensex increased 1.4 percent in the three months ended June, compared with an estimate of 5.8 percent before the reporting season, Bank of America Corp. analysts Jyotivardhan Jaipuria and Anand Kumar wrote in a report dated Aug. 19.
About 47 percent of Sensex companies that posted earnings for the June quarter missed analyst estimates. That compares with 27 percent for the March quarter, and 43 percent in the three months ended December, data compiled by Bloomberg show.
The Sensex has lost 5.7 percent this year and trades at 13 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s 9.8 times.
International investors sold a net $ 118 million of Indian shares on Aug. 21, data from the regulator show. That pared this year’s inflow to $ 12.1 billion, the data show.
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