Indian stock-index futures gained as rupee forwards increased the most in almost 12 months and oil prices declined.
SGX CNX Nifty Index futures for August delivery, which expire today, rose 0.6 percent to 5,299.5 at 10:08 a.m. in Singapore. The most-actively traded September contract gained 0.6 percent to 5,314.5. The underlying CNX Nifty (NIFTY) Index fell 0.1 percent to 5,285 yesterday, while the S&P BSE Sensex rose 0.2 percent. The Bank of New York Mellon India ADR Index of U.S.- traded shares rose 1.1 percent. One-month rupee forwards rose for the first time in four days today, adding 1.6 percent to 67.91. The rupee plunged the most since 1993 yesterday, losing 3.9 percent to a record 68.845 per dollar.
The Sensex has tumbled 7 percent in August, driving valuations to 9 percent below the five-year average yesterday, on concerns the rupee’s record plunge and oil’s advance will hamper government efforts to cool inflation and tackle an unprecedented current-account deficit. Data tomorrow may show the Indian economy grew at the slowest quarterly pace in more than three years in the three months ended June. International investors were net sellers of Indian (SENSEX) stocks for a seventh day on Aug. 27, data showed yesterday.
“There’s a bit of short-covering and rollovers expected before the derivatives expiry,” Paras Adenwala, managing director of Capital Portfolio Advisors, said in an interview on Bloomberg TV India yesterday. “Valuations are cheap but unless I see the rupee stabilizing for a few days I won’t jump in and buy aggressively.”
Rupee Slump
Foreign investors sold a net $ 208.1 million of Indian shares on Aug. 27, paring this year’s inflow to $ 11.6 billion. That’s still the second-highest among 10 Asian markets tracked by Bloomberg.
The rupee has depreciated 20 percent this year, meaning dollar-based investors have lost 25 percent from Sensex shares, data compiled by Bloomberg show. The Sensex’s valuation has dropped to 12.8 times estimated 12-month profit, compared with the five-year average of 14.1 times.
A weakening currency makes imports more expensive for a country that imports 80 percent of its oil. India is also the largest importer of gold, which advanced to an all-time high of 35,074 rupees per 10 grams on the Multi Commodity Exchange of India yesterday.
Data tomorrow may show Indian economic growth slowed to 4.6 percent in the quarter ended June 30, from 4.8 percent in the previous three months, according to the median estimate of 43 analysts in a Bloomberg survey. That would be the slowest pace of expansion since the quarter ended March 2009.
The economic slowdown and a weak currency are 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 began, 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, compared with 27 percent for the March quarter, data compiled by Bloomberg show.
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