India Stock Futures Gain On Rate-cut Forecast, Greece

Indian stocks dropped, reversing an earlier advance, after the country’s central bank unexpectedly left interest rates unchanged. State Bank of India, the nation’s biggest lender, sank 3.3 percent, erasing an intraday gain of 2.2 percent. Tata Power Co. (TPWR), the largest non-state-owned generator, fell 2.5 percent. The BSE India Sensitive Index (SENSEX) slid 1.2 percent to 16,753.73 at 12:21 p.m. in Mumbai. The 30-stock gauge had risen as much as 0.9 percent before the Reserve Bank of India’s announcement. Governor Duvvuri Subbarao left the key repurchase rate at 8 percent, a stance that contrasts with rate cuts in Australia and China in the past two weeks as the impact of Europe’s debt crisis fans through Asia and dominates the agenda of a Group of 20 summit starting in Mexico today. Subbarao’s room to counter the weakest Indian growth in almost a decade is being limited in part by a plunge in the rupee, which has stoked aninflation rate already above 7 percent. “This is a shocker,” said D.K. Aggarwal, who manages about $100 million of local assets as chairman at SMC Wealth Management Ltd. in New Delhi. “A rate cut was a must because the growth was slowing. The confidence has taken a beating.” Only four of 25 economists in a Bloomberg survey predicted the RBI’s decision, with 19 expecting a 0.25 percentage-point cut and the remainder a half-point reduction. Growth concerns have pushed down the Sensex 9 percent from this year’s high set on Feb. 21. Prime Minister Manmohan Singh is grappling with an economy hobbled by record trade and budget deficits, corruption scandals and infighting in the coalition that has stymied his efforts to lure more foreign investment. Gross domestic product climbed 5.3 percent in the quarter ended March from a year ago, the least since 2003, imperiling the prime minister’s goal of 9 percent annual gains to reduce