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India Stock Futures Swing Between Gains, Losses on Oil

20 Mar 2012

Indian stocks gained, ending three days of losses, as a first drop in crude prices in three days improved the outlook for inflation and interest rates.

Sun Pharmaceutical Industries Ltd. (SUNP), the nation’s most valuable drugmaker, surged the most in two weeks. DLF Ltd. (DLFU), the biggest developer, rose 1.4 percent. State Bank of India, the largest lender, climbed for the first time in four day.

The BSE India Sensitive Index (SENSEX), or Sensex, rose 0.2 percent to 17,309.28, according to preliminary closing prices at 3:30 p.m. in Mumbai, halting a three-day, 3.6 percent decline. The gauge has fallen for four straight weeks, the longest such run since November, even as global investors put a net $3.8 billion into local stocks in the period. Funds focused on developing nation stocks posted a net inflow of $453 million for the week ended March 14, the 11th straight weekly increase, according to data by EPFR Global.

“Liquidity is likely to be benign for the global markets, especially for emerging risk on assets like India,” Tirthankar Patnaik, a strategist at Religare Capital Markets Ltd., told Bloomberg UTV today. “The market will look for global cues. Given that most of the downsides in India have been known for quite a while, there will be limited downside from here. Global cues are likely to remain positive.”

Oil futures in New York dropped as much as 0.9 percent on speculation Saudi Arabia may boost output. Lower energy prices cut costs for companies in India, which imports almost 80 percent of its oil, and ease a burden on government finances. India and Turkey are the “most negatively” affected by rising oil prices, according to a Morgan Stanley (MS) report last month.

The S&P CNX Nifty (NIFTY) Index on the National Stock Exchange of India rose 0.5 percent to 5,274.85. India VIX, which measures the cost of protection against declines in the Nifty, sank 4.5 percent to 21.94. The BSE 200 Index (BSE200) gained 0.4 percent.

Overseas investors bought a net 9.2 billion rupees ($182.6 million) of stocks on March 16, taking their investment in the nation’s equities this year to 436.5 billion rupees, according to the market regulator.