The Rupee is expected to weaken further against the dollar.
Gold, forex assets, IT sector, pharma. Devangshu Datta explains why each of these is a good hedge against market shocks at this time.
The rupee has not depreciated enough against other currencies.
Equity benchmark Sensex tumbled 674 points on Friday, weighed by losses in banking stocks as an unabated spike in new coronavirus cases fuelled uncertainty over the economic impact of the pandemic. After hitting a low of 27,500.79 during the day, the 30-share BSE barometer ended 674.36 points or 2.39 per cent lower at 27,590.95. The NSE Nifty shed 170 points, or 2.06 per cent, to finish at 8,083.80.
A rate cut by the Reserve Bank is likely to help the rupee, which today hit a record low of 57.54 versus dollar, says a Bank of America Merrill Lynch (BofA-ML) report.
Asian markets were trading mixed with shares in China witnessing profit taking after sharp gains in the previous session.
The rupee is expected to remain under pressure in the near term, given the strengthening of the dollar against major global currencies and widening of the trade deficit.
In the second consecutive week of an increase in the kitty, India's forex reserves have grown by $2.54 billion to $547.25 billion for the week ended November 18, the RBI said on Friday. In the previous reporting week, the overall kitty had swelled by $14.72 billion in the highest weekly rise since August 2021 to $544.71 billion. It can be noted that in October 2021, the country's forex kitty had reached an all-time high of $645 billion.
A muted revenue performance in the September quarter and weak management commentary weighed on the stock of consumer major Marico which shed 8.5 per cent to Rs 542 from its intraday highs on Tuesday. The company indicated that demand trends were similar to that of the June quarter with instances of increasing food prices and below-normal rainfall distribution in some regions impeding the anticipated recovery in rural demand.
The Indian economy is likely to grow at over 7 per cent in the current fiscal year, former Niti Aayog vice chairman Arvind Panagariya said on Wednesday, while observing that the growth rate should sustain next year too provided the forthcoming Budget does not have any negative surprises. Panagariya further said recessionary fears have been around for a while but so far neither the US nor the EU has gone into recession. "From the viewpoint of India, in terms of headwinds originating abroad, the worst is probably behind us," he told PTI.
India's forex reserves dropped by $3.85 billion to $524.52 billion for the week ended October 21, the RBI said on Friday. The overall reserves had dropped by $4.50 billion to $528.37 billion in the previous reporting week, and have been declining for many months now. In October 2021, the country's forex kitty had reached an all-time high of $645 billion.
Tata Steel was the biggest gainer in the Sensex pack, rallying 5.78 per cent; followed by Yes Bank, NTPC, L&T, Axis Bank, SBI, M&M, HDFC twins, Vedanta, HUL, PowerGrid, ICICI Bank, Kotak Bank, HCL, TCS and ITC, gaining up to 3.79 per cent.
Leading computer makers, including Lenovo and HP, are set to hike prices of their products by up to 10 per cent in coming weeks, hit by increasing input costs due to rupee's southward journey.
Despite the possibility of the economy bottoming out, the investment cycle could remain weak for another couple of years and earnings downgrades should continue.
Bajaj Auto was the top laggard in the Sensex pack, tumbling around 6 per cent, followed by M&M, Reliance Industries (RIL), Tata Steel, Tech Mahindra, SBI, Axis Bank and ICICI Bank. NSE Nifty tumbled 162.60 points or 1.36 per cent to 11,767.75.
Gold burnished its image as the go-to asset class during turbulent times. However, investors seemed to have missed the bus. Net inflows into gold exchange-traded funds (ETFs) plunged to a four-year low of Rs 653 crore in 2022-23 (FY23), even as gold emerged as the top-performing asset class.
India's current account deficit is expected to deteriorate in the current fiscal on account of costlier imports and tepid merchandise exports, according to the Finance Ministry's monthly economic review. The review released on Thursday by the ministry also said that global headwinds would continue to pose a downside risk to growth as crude oil and edibles, which have driven inflation in India, remain major imported components in the consumption basket. For the present, it said, "their global prices have softened, as fears of recession have dampened prices somewhat. This would weaken inflationary pressures in India and rein in inflation."
'Macro headwinds are rising for Indian equities in the form of rising commodity prices, especially oil, depreciating rupee, fiscal challenges, election-related uncertainty and upside risks to inflation'
India's foreign exchange reserves soared by $11.02 billion to reach $561.162 billion for the week ended December 2, Reserve Bank data showed on Friday. This is the fourth consecutive week of rise in the reserves. In the previous reporting week, the overall reserves had grown by $2.9 billion to $550.14 billion. For the week ended November 11, the forex kitty had jumped by $14.72 billion in its second fastest weekly acceleration ever.
A firming trend in domestic stock markets, however, capped the rupee fall to some extent
The current capital flight is a short-term phenomenon, the agency said.
10 non-bank and non-finance stocks from the BSE500 Index universe that offer an optimal blend of low valuation, reasonably robust revenue and earnings growth in recent quarters, a strong balance sheet, and most importantly, positive cash flow from their operations.
The industrial production grew by two per cent in September, mainly on account of better performance by power and mining sectors.
The domestic currency has dropped 40 paise or 0.60 per cent in two days
An expected withdrawal of FIIs from the market likely to weaken the rupee against the dollar.
Apart from sustaining your portfolio when the domestic market is faring well, global diversification also safeguards it against currency risk.
India's forex reserves dropped by $4.85 billion to $532.66 billion as on September 30, the Reserve Bank said on Friday. The reserves, which have been dipping as the central bank deploys the kitty to defend the rupee amid pressures caused majorly by global developments, had declined by over $8.13 billion to $537.52 billion in the previous reporting week. In October 2021, the country's forex kitty had reached an all-time high of $645 billion.
India's economic growth rate is expected to be at least 6 per cent in the 2013-14 fiscal, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said.
The rupee on Tuesday weakened by 15 paise to close at 63.30 against the US currency
Softening of global commodity prices might not help much
The local currency opened higher at 61.20 a dollar from the previous close of 61.30 at the Interbank Foreign Exchange Market.
The rupee snapped its two-day winning run against the dollar.
The three hour long meeting was attended by Secretaries of departments of Revenue, Expenditure, Financial services and Disinvestment.
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The latest macro-economic numbers confirm the economy trundles along in a low growth trajectory, while inflation climbs.
Unseasonal rains watered down the performance of consumer durables companies as temperatures cooled, impacting the sales of refrigerators and air conditioners (ACs) in the 2023-24 (FY24) April-June quarter. Centrum says in its report on the sector that the trade channel indicates a 25-30 per cent year-on-year (YoY) decline in sales of refrigerators and ACs in April and May due to restricted buying. "While some green shoots in demand were visible in June, overall growth for the quarter is likely to remain at a negative 10-12 per cent," observes the brokerage.
Pricing pressure in traditional technology services and slow growth in emerging technologies may turn out to be the spoiler for Indian infotech companies, says Ayan Pramanik.
The rupee had ended five paise lower at 61.92 on Tuesday.
The 50-stock NSE barometer Nifty finished 14.75 points, or 0.14 per cent, down at 10,382.70 after shuttling between 10,340.65 and 10,393.15.
Dwaipayan Bose on how index funds play a key role in the diversification of portfolios and help manage risks
The DTH industry has to pay entertainment tax to state governments and service tax to the central government.
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