India Index Futures Fall After Sensex Caps Best Year Since 2009

Indian stock-index futures dropped, following a 2014 surge in shares that sent the benchmark index to its biggest annual advance since 2009.

SGX CNX Nifty Index futures for January delivery fell 0.5 percent to 8,320 at 10:17 a.m. in Singapore. The underlying CNX Nifty Index (NIFTY) on the National Stock Exchange of India Ltd. rose 0.4 percent to 8,282.70 yesterday. The S&P BSE Sensex (SENSEX) also climbed 0.4 percent to 27,499.42. The Bank of New York Mellon India ADR Index of U.S.-traded shares fell 0.2 percent to 1,437.07.

The Sensex rallied 30 percent in 2014, the most among the world’s 20 biggest markets after China, as foreigners bought $ 16 billion of local stocks on expectations economic growth will rebound after Prime Minister Narendra Modi won the biggest election mandate in 30 years in May. The economy still faces challenges and government’s resolve for next year is to boost the manufacturing sector through more investment, Finance Minister Arun Jaitley said in a post on Facebook yesterday.

In 2014, “markets loved Modi and this saw FIIs pumping in close to $ 16 billion in equities,” Jayant Manglik, president of retail distribution at Religare Securities Ltd., wrote in an e-mail. “The caveat, of course, is delivery on domestic policy implementation and relative global economic stability.”

A further extension of the rally in 2015 may hinge on Modi’s ability to push through reforms after opposition parties stalled the passage of some key bills last month. The Sensex retreated 4.2 percent in December, capping its biggest monthly drop since February 2013.

Bank Policies

India’s state-run lenders will probably be the focus of a two-day gathering of bank chiefs and regulators as they seek to reverse the companies’ lowest profitability rates in at least nine years.

Officials led by Modi, Reserve Bank of India Governor Raghuram Rajan and Jaitley start the brainstorming session tomorrow with the heads of government lenders in the city of Pune, near Mumbai, which may result in policies designed to boost earnings and capital ratios, according to Reliance Securities Ltd.

Global investors sold a net $ 34.3 million of local shares on Dec. 29, paring 2014’s inflows to $ 16 billion. The Sensex is valued at 15.1 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 11.1, data compiled by Bloomberg show.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

Nifty Futures

niftyfutures.org@imediaone.com

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