Azernews.Az

By Bloomberg

India’s benchmark gauge of demand for equity posted its biggest monthly drop since March as stocks rallied ahead of the monetary policy meeting next week.

The India VIX Index declined 4.9 percent to 14.57 at the close in Mumbai. The gauge has retreated 14 percent this month, the steepest loss since March. The CNX Nifty index gained 1.3 percent to 8,532.85. Nifty August futures climbed 1.3 percent to 8,569.65, the biggest premium over the spot index since May. The Sensex advanced 1.5 percent.

This month’s decrease in option costs comes as the Nifty rose for a third day. Brent crude is on course for its biggest monthly decline this year, easing inflationary pressure in a nation that relies on imports to meet about 80 percent of its oil needs. Twelve of 17 Sensex companies, or 71 percent, that have posted earnings for the June quarter have matched or beaten estimates, compared with 40 percent in the March quarter.

“Volatility is dropping as fall in commodity prices will lead to lower inflation and increase rate-cut chances,” Chakri Lokapriya, the Mumbai-based chief investment officer at TCG Advisory Services Pvt., which manages about $3 billion in assets worldwide, said by phone. “Further, earnings of banks are beginning to show a bottoming out of asset quality.”

Reserve Bank of India Governor Raghuram Rajan, who reviews monetary policy on Aug. 4, flagged deficient rains, oil prices and external volatility as risks to inflation in June, when he cut the main rate for a third time this year to 7.25 percent. Only three of 37 economists surveyed by Bloomberg see a reduction next week, with the rest expecting no change.

Nifty put options with a strike price of 8,200, and 8,800 calls, were the most popular by number of outstanding contracts.