Indian stock-index futures gained after benchmark gauges extended records yesterday.

SGX CNX Nifty Index futures for June delivery rose 0.1 percent to 7,432.5 at 10:10 a.m. in Singapore. The underlying CNX Nifty Index added 0.7 percent to a record 7,415.85 yesterday. The S&P BSE Sensex (SENSEX) also advanced 0.7 percent to an all-time high. The Bank of New York Mellon India ADR Index of U.S.-traded shares lost 0.1 percent.

Reserve Bank of India Governor Raghuram Rajan left the benchmark repurchase rate unchanged at 8 percent yesterday, saying there would be room for monetary loosening in the future if inflation slowed more than estimated. The central bank also lowered the proportion of deposits banks must invest in government debt or other approved securities, a move aimed at freeing up funds for lending.

“The RBI pleased the market with the Statutory Liquidity Ratio cut, which is a huge positive for real estate and bank stocks,” Kishor P. Ostwal, chairman of CNI Research Ltd., wrote in an e-mail. “It shows that there is good synergy between the finance minister and the RBI.”

The RBI, which has increased rates twice since September, said further policy tightening won’t be warranted if consumer-price inflation stays on course to hit 8 percent in January 2015 and 6 percent a year later. India’s consumer price gains accelerated to a three-month high of 8.59 percent in April, the fastest pace among 18 Asian economies tracked by Bloomberg. Risks to the central forecast of 8 percent retail inflation by January 2015 “remain broadly balanced,” the RBI said.

El Nino Risk

There’s a 70 percent chance of the El Nino weather pattern forming this year, Australia’s Bureau of Meteorology said yesterday. The weather event brings drought to the Asia-Pacific region, threatening the monsoon that’s the main source of irrigation for India’s 235 million farmers and putting pressure on food prices.

Agriculture represents about 14 percent of the Indian economy, which has grown at less than 5 percent for seven of the last eight quarters.

“Our analysis suggests the RBI will need to be very lucky to see inflation fall to its ambitious 6 percent target by January 2016,” Robert Prior-Wandesforde, an analyst at Credit Suisse Group AG, wrote in a note today. “We continue to believe that rate hikes are much more likely than rate cuts.”

The central bank policy statement “conveniently ignored” that inflation risks “remain clearly skewed to the upside,” BNP Paribas SA analyst Richard Iley wrote in a note today.

The Sensex has climbed 17 percent this year and is valued at 15.3 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.7.

Overseas investors bought a net $ 522.7 million of Indian shares on May 30, taking this year’s inflows to $ 8.1 billion, the most among eight Asian markets tracked by Bloomberg.

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