Friday 15 June 2012

India Stock Futures Gain On Global Stimulus Speculation




Indian stocks rose, with the benchmark index heading for a second weekly gain, on speculation central banks in India, Europe and the U.S. may act to stimulate economies amid faltering growth.
Tata Motors Ltd. (TTMT), the nation’s biggest truckmaker, climbed 1.5 percent, rebounding from its biggest drop in two weeks yesterday. Asian stocks gained as speculation the U.S. Federal Reserve may act to stimulate economic growth countered concerns that Europe’s debt crisis will worsen. Hero MotoCorp Ltd. (HMCL), India’s largest motorcycle maker, climbed 1.6 percent.
The BSE India Sensitive Index (SENSEX), or Sensex, added 0.5 percent to 16,752.17 at 10:47 a.m. in Mumbai. The gauge has risen 0.2 percent this week. Bank of England Governor Mervyn King said yesterday the case for looser policy is “growing,” while U.S. economic data may support the case for further stimulus from the Federal Reserve, which meets for two days from June 19.
“Global optimism is driving Indian equities today after we saw a good correction yesterday,” Anita Gandhi, a director at Arihant Capital Markets Ltd. in Mumbai, said by phone. “Markets believe the Indian central bank will certainly ease monetary policy.”
Policy makers globally are being pressed into action to boost a global economy that’s suffering its worst slowdown since the recession ended in 2009. China cut borrowing costs on June 7 for the first time in more than three years, two days after Australia also reduced rates.
India’s central bank may cut rates for a second time this year at its policy meeting on June 18 amid the slowest economic growth in nine years, even after data yesterday that showed wholesale prices accelerated for a second month in May.

Accelerating Prices

Inflation quickened a faster-than-estimated 7.55 percent, after rising 7.23 percent in April. The median of 37 forecasts in a Bloomberg survey was for a 7.5 percent gain. A separate report showed a drop in Indian exports and imports last month.
India’s gross domestic product expanded 5.3 percent from a year earlier in the March quarter, stoking concern the nation’s economic outlook has deteriorated as policy paralysis deters investment and Europe’s debt crisis crimps exports. Official data earlier this week showed factory output grew less than analysts estimated in April, adding to the case for a rate cut.
The RBI will lower the benchmark repurchase rate by 25 basis points to 7.75 percent, according to 19 of 25 economists in a Bloomberg survey. Four predict the central bank will leave the rate unchanged and two forecast a 50-basis-point cut.

Foreign Funds

The 30-stock Sensex rallied 4.7 percent last week, its best weekly advance this year, amid speculation the central bank would ease monetary policy. The gauge has climbed 8.4 percent this year and trades at 13.2 times estimated earnings, near the lowest in more than three years. The MSCI Emerging Markets Index (MXEF) trades at 9.9 times.
Tata Motors rose 1.5 percent to 230.10 rupees after slumping 4.5 percent yesterday. ICICI Bank Ltd. (ICICIBC), the second- largest lender, rose 1.7 percent to 832.7 rupees. Hero climbed 1.6 percent to 1,984.75 rupees, the first gain in three days.
India VIX, which measures the cost of protection against losses in the S&P CNX Nifty Index, added 0.3 percent to 25.79. The Nifty gained 0.5 percent to 5,077.65. The BSE-200 Index (BSE200) rose 0.4 percent to 2,053.35. Combined trading volume on India’s top two exchanges was 690.65 million shares yesterday, compared with a 12-month daily average of 906.39 million.
Overseas investors were net buyers of local shares for a sixth straight day on June 13, purchasing a net $49 million of stocks and taking their total investment this year to $8.56 billion, data from the regulator show. They cut holdings by $273 million in May, a second consecutive month of net sales.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net




source: http://www.bloomberg.com/news/2012-06-15/india-stock-futures-gain-on-global-stimulus-speculation.html

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