OREANDA-NEWS. September 30, 2015. Emerging markets around the world had a rough August, followed by a largely forgettable September. Plagued by a surprise revaluation of the Chinese yuan and the resultant capital outflows from emerging markets, Asian countries saw their currencies tanking and equities sinking.

In India, the CNX Nifty Index retreated to a low of 7,558.80 before staging a muted recovery, while the Indian rupee slumped aganst the US dollar.

Over the month, the SGX Nifty Index Futures saw brisk trading with more than 2 million contracts or US\\$32 billion in notional value traded (the highest traded volume in more than two years) as investors used the offshore contract to manage their risk exposures.

Source: Singapore Exchange as of 22 September 2015

While Indian equities have rebounded somewhat from their lows in August, turnover has fallen to pre-2015 levels and market capitalisation has stagnated.

In addition, foreign funds have offloaded Indian equities in August and September due to fears of a US interest rate hike and China’s revaluation of the renminbi.

Table: Change in Foreign Portfolio/ Foreign Institutional Investors’ Investments

Indices Equity (US\\$)
January +20,154,460,955
February +1,790,328,925
March +1,884,244,751
April +1,828,550,482
May -899,844,653
June -252,695,942
July +806,384,648
August -2,558,365,336
September* -355,751,845

Source: National Stock Exchange of India *Up to 22 September

Source: Bloomberg as of 22 September 2015

Like other emerging market currencies, the Indian rupee has depreciated against the US dollar – albeit to a lesser extent when compared with other currencies. This has hit the country’s export competitiveness.

Source: Bloomberg as of 22 September 2015

Source: Singapore Exchange as of 31 August 2015

Daily average volume for the SGX INR/USD futures soared to a new record high of 23,482 contracts in August, up 8.7 times year-on-year from the 2,698 contracts traded in August 2014.

With equities stalling and burdened with an uncompetitive currency, investors are pinning their hopes on an interest rate cut to provide a boost. 

Lower Inflation, Political Pressure Add Impetus for RBI to Ease Policy

India's consumer price inflation eased for a second straight month in August, strengthening the case for the central bank to cut rates later this month.

The consumer price index rose 3.66% year-on-year after a 3.69% increase in July, data from  the Central Statistics Office showed. The pace of increase is the slowest in 18 months.

Source: Bloomberg as of 22 September 2015

A predominantly rural economy with a large percentage of the population eking out a living from the soil, India will feel any rise in inflation keenly.

Earlier, RBI Governor Raghuram Rajan hinted at lower interest rates.

"Falling commodity prices and astute food management by the government should help RBI lower rates", said Rajan at a national banking summit organised by the Indian Banks’ Association (IBA) and Federation of Indian Chambers of Commerce and Industry (FICCI) in August.

Meanwhile, Arvind Panagariya, a top adviser to Prime Minister Narendra Modi, expressed support for an interest rate cut to boost the country's sluggish economy, increasing pressure on RBI ahead of its policy review later this month.

In an interview with CNBC-TV18 on 10 September, Arvind Panagariya, who runs the government's NITI Aayog policy commission, said the economy needs a rate cut of 50-100 basis points.

With major political reforms stalling for months in parliament, India will need RBI to provide economic leadership.

Unlike other markets where historical demand has been characterised by speculative (and frequently shifting) drivers, India is a market led by fundamentals. Traditionally, the net exposure to SGX Nifty Index Futures has been consistent across time and client type, and constitutes a large proportion of the gross exposure. But this is changing.

We have seen net exposure by client type in the past two months vanish, breaking a year-long rule of consistency. Against the backdrop of waning promises for Modi-inspired reforms, reversal of FDI flows, and asset gains led by expectations of further monetary easing by the RBI, speculative trading has quickly filled the vacuum left by fundamental investors.

Contract Specifications



SGX MSCI India Futures SGX CNX Nifty Futures SGX INR/USD Futures

Underlying Index

Bloomberg ticker:

MSCI India Index


CNX Nifty Index





Trading Hours

Singapore Time

T session

T+1 session

9.00 am – 6.15 pm
7.15 pm – 2.00 am
9.00 am – 6.10 pm
7.15 pm – 2.00 am

7.40am – 7.30pm

8.15pm -2.00am

LTD: 7.40am – 2.35pm

Contract Size

US\\$50 x Futures Price

? US\\$54,800

US\\$2 x Futures price ? US\\$17,500 INR 2,000,000
Minimum Price Fluctuation

0.2 index point (US\\$10)

? 1.87 basis points

0.5 index point (US\\$1)

? 0.58 basis points

0.010 US cents

(per 100 Rupees)

Contract Months

2 serial & 4 quarterly months

12 serial monthly

Last Trading Day Last Thursday of the expiring contract month. If this falls on an India holiday, the last trading day shall be the preceding business day. 2 business days prior to the last business day of the contract expiry month

Cash settled (USD)

Final Settlement Price Official closing price of Index on the last trading day, rounded to 2 decimal places. Equal to the reciprocal of the RBI USD/INR Reference Rate published approximately at 2.45pm – 3.00pm (Singapore Time), multiplied by 10,000 to convert such spot exchange rate to United States Cents per 100 Indian Rupees, rounded to 2 decimal places.

Minimum 50 lots

Position Limits (net) 10,000 contracts 25,000 contracts 10,000 contracts