Rupee movement, global cues key for stocks this week: Experts
The broader NSE Nifty too fell below the 10,100 level by dropping 100.10 points to end at 10,094.25
Experts say foreign investor sentiment was bolstered by the US Federal Reserve's decision to go slow with interest rate hikes and hopes of political stability.
On the macro front, market participants will closely watch the FY'15 fiscal deficit target
The rupee on Thursday recovered by a hefty 60 paise to 53.24 against the US dollar in early trade on the Interbank Foreign Exchange market after the Reserve Bank tightened norms for utilisation of the foreign currency fixed deposit funds to check outflow of forex.
The clarification by the National Securities Depository (NSDL) - which is tasked with monitoring foreign portfolio investor (FPI) investment in domestic stocks - that the accounts of top investors in Adani group stocks remain 'active' has helped prevent a $500-million selloff of shares. Analysts said a freeze of the FPI accounts, as reported by some media outlets, could have prompted global index providers to cut weighting of four Adani group companies from their global indices. Brian Freitas, an analyst at independent research provider Smartkarma, said if the FPI accounts were indeed frozen, FTSE and MSCI would have reduced weighting of Adani group companies at the next rebalance, since it would have meant that the large part of the free float was not tradeable.
'Given the worries about sluggish growth, rising interest rates and likely volatility, it's quite logical to infer that the SIP route could be the preferred way of investing.'
As markets complete the first half of the calendar year 2022 (CY22) with a fall of around 9 per cent, the interest-rate hike trajectory by global central banks, paired with the conundrum of inflation and growth, will move the needle for the market, observe experts. Here's a quick rundown on what they'll react to over the next six months.
The NSE Nifty after shuttling between 10,441.90 and 10,341.90, ended 6.15 points, or 0.06 per cent down at 10,380.45.
This could be attributed to the attractive valuation of the Indian equities after the sharp correction during the first quarter of calendar year 2020 and significant depreciation of the Indian rupee against USD, which provided them a rather good entry point.
Sentiment took a dramatic change particularly in the last one hour of trading with the lower opening of the European markets and investors booking profits in broader markets at record levels
Tata Steel was the top loser in the Sensex pack, sinking over 5 per cent, followed by SBI, IndusInd Bank, Bajaj Finance, HDFC Bank and NTPC. NSE Nifty tanked 371 points to 16,614.20.
Although the RBI's open market operations have ensured sufficient system-level liquidity, some sectors are finding liquidity to be a challenge owing to their credit profile.
Pakistan's current account deficit (CAD) increased to a 4-year high of $17.4 billion in the fiscal year of 2021-22, indicating more troubles for the ailing economy of the cash-strapped country. The State Bank of Pakistan (SBP) on Wednesday reported that the country recorded a CAD of $17.406 billion in FY22 compared to a gap of just $2.82 billion in FY21. According to Dawn newspaper, the massive CAD speaks a lot about the severe problem of the balance of payments.
Sebi has put in place a strong deterrence to check any misuse of participatory notes.
The top losers from the Sensex pack are ONGC, Coal India, Vedanta, Reliance Inds and L&T.
Continued outflows amid moderation of domestic investments are a concern
'A soft landing of the Indian economy would be a long-term positive for the equity markets.'
The NSE Nifty cracked below the 10,800-mark to hit a low of 10,753.05 intra-day, before closing at 10,762.45 with a loss of 59.40 points, or 0.55 per cent.
The rupee has depreciated by about 25 per cent in the past three months, from close to Rs 83 in mid-May, while it was even higher at about Rs 80 against the British Pound in March.
Investors remained cautious in the face of the expiry of November series contracts in the derivatives segment, which also dampened sentiment.
Illustration: Uttam Ghosh/Rediff.com After a brief respite at the year's start, FPIs have dumped shares worth more than $5.7 billion (Rs 42,596 crore), taking the cumulative net outflows since October to $10.5 billion (Rs 78,466 crore), and adding to the volatility on the bourses. The figure would have been a lot worse had it not been for net purchases to the tune of $5.7 billion in the primary market from October to date.
Worried over excessive outflow of foreign exchange as royalty and fees for technology transfer and use of brand names, Commerce and Industry Minister Anand Sharma wrote to Finance Minister P Chidambram on the matter.
The reserves rose to $501.70 billion helped by a whopping rise in foreign currency assets, the latest data from the Reserve Bank of India.
Other losers included HCL Tech, Yes Bank, IndusInd Bank, TCS, ONGC, Bajaj Finance, PowerGrid, Vedanta, Asian Paints, NTPC and Hero MotoCorp, which shed up to 4.07 per cent.
Thus far in FY21, BSE, NSE have rallied 70 per cent and 71 per cent, respectively.
In absolute terms, the CAD stood at $4.6 billion in the current fourth quarter, compared with $13 billion in the year-ago quarter and $17.7 billion in the third quarter of fiscal year 2018-19.
'The potential headwind is that the Indian economy is likely to see a slowdown in growth rates over the next two years.'
Strong month-end demand for the US currency mainly from oil importers along with currency futures expiry related purchases predominantly weighed heavily on the forex market and haunted investor sentiment.
The broader Nifty of National Stock Exchange scaled the 10,200 mark intra day before closing at 10,184.85, showing a sizeable gain of 38.30 points, or 0.38 per cent.
India is among 75 countries with which Switzerland's Federal Tax Administration has exchanged information on financial accounts within the framework of global standards on Automatic Exchange of Information.
The rating outlook change is relevant now, as the US Federal Reserve is set to end its monthly bond-buying programme in October.
The indices closed with losses for the week, with the Sensex declining 476.14 points, and the broader NSE Nifty falling 155.45 points during the period.
RBI will review the monetary policy again on September 29.
"According to the global financial services major, though CAD at 3.2 per cent of GDP is significantly lower than the 4.8 per cent it registered in fiscal year 2012-13 ", it still remains higher than the 2.4 per cent of GDP that we estimate as the optimal current account deficit".
Despite the 3 per cent gain in September 2019, the FPI sell-off during the quarter has seen the benchmark indices - the S&P BSE Sensex and the Nifty 50 register negative returns in Q3CY19.
Finance Minister P Chidambaram on said that financing current account deficit (CAD) year after year is a challenge and the only way to deal with the problem is by increasing exports.
Participants are keeping an eye on the Winter Session of Parliament, which started today, and US fiscal policies to be followed by President-elect Donald Trump
Due to tax associations with the fiscal-ending, April is a month of SIP renewal. So, the April numbers will be important and may perhaps, mark a change in retail attitude.
There has been a decline in foreign direct inflow from China in the last three years, with FDI coming down to USD 163.77 million in 2019-20, Minister of State for Finance Anurag Singh Thakur informed the Lok Sabha on Monday. Giving details of the total foreign direct investment (FDI) inflow from Chinese companies in India, he said, it was USD 350.22 million in 2017-18, while it declined to USD 229 million in the following year.
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