He said the Rs 79.25 mark will act as resistance for rupee and break above Rs 79.25 will trigger short covering for rupee…reports Asian Lite News
The Indian rupee will trade between Rs 79.50-Rs 80.50 against the US dollar next week, a senior official of LKP Securities said on Friday.
On Friday during the early trade, the Indian rupee gained seven paise to touch Rs 79.92 for a dollar.
According to Jateen Trivedi, Vice President, Research Analyst at LKP Securities, the rupee range can be seen between 79.50-80.50 for the coming week.
“Rupee traded in a range between 79.80 and 79.98. As dollar index traded in a range, broadly the trend for dollar is positive till the time it is above $105… next hurdle for dollar can be seen around $110, hence rupee can be seen weak… the trend continues towards 80.50,” Trivedi said.
He said the Rs 79.25 mark will act as resistance for rupee and break above Rs 79.25 will trigger short covering for rupee.
The rupee closed Monday’s trade at Rs 78.04 per US dollar, after depreciation as low as Rs 78.29 in intra-day deal…reports Asian Lite News
The Indian currency rupee breached the Rs 78 mark against the dollar for the first time ever on Monday, hitting a new lifetime low against the US dollar.
The rupee closed Monday’s trade at Rs 78.04 per US dollar, after depreciation as low as Rs 78.29 in intra-day deal.
“There is no fresh trigger to predict if the rupee will be 79 or 80 unless and until there is a conflict between US and China with regards to Taiwan, other than that there shouldn’t be any correction towards 77 or 77.50 in the spot,” said Emkay Global Financial Services in a note.
The rupee might see more weakness ahead of the US monetary policy review meeting starting later this week, where the US Fed is expected to hike rates and showcase a more aggressive action, said Jigar Trivedi, Research Analyst, Commodities & Currencies Fundamental, Anand Rathi Shares & Stock Brokers.
However, runaway depreciation might not happen amid the central bank’s intervention, Trivedi said.
Coming to the markets in the week ahead. We are passing through tough times and FII’s seem to sell non-stop irrespective of markets. With key supports broken, one can only expect markets to bounce to regain some of the lost ground…reports Arun Kejriwal
It was a topsy-turvy week and the good part was that it was for just four days. Markets were super volatile and lost on two of the four trading days with the remaining two being flat. BSESENSEX lost 2,225.31 points or 3.90 per cent to close at 54,835.58 points, while NIFTY lost 691.30 points or 4.04 per cent to close at 16,411.25 points. The broader markets saw BSE100, BSE200 and BSE500 lose 4.11 per cent, 4.17 per cent and 4.04 per cent, respectively, while BSEMIDCAP lost 5.28 per cent and BSESMALLCAP lost 5.31 per cent. Stocks across the board were under pressure and there were just a handful of gainers in all.
The Indian Rupee was under pressure and lost 50 paisa or 0.65 per cent to close at Rs 76.92 to the US Dollar. Dow Jones had a choppy week and managed to close virtually flat. It lost 77.84 points or 0.24 per cent to close at 32,899.37 points.
The US Fed raised interest rates by the widely expected 50 basis points on Wednesday but saw Dow Jones rise 932 points on the day of the announcement. On Thursday, after having caught all short sellers on the wrong side the previous day, markets tanked 1,063 points. Friday saw markets opening weak and lose intraday about 525 points before recovering to close with losses of just 98 points. Markets have become vulnerable in the US and there is a wider belief that there would be another 4 rate hikes of 50 basis points or more in the next 10 months.
In India, RBI Governor Shaktikanta Das called a surprise conference on Wednesday and announced a sudden and unexpected rate hike with effect from May 21. Repo rate has been hiked by 10 per cent from 4 per cent to 4.40 per cent while CRR has been hiked by 50 basis points to 4.50 per cent from the earlier 4.00 per cent. This hit our markets quite badly on Wednesday and we lost about 1,300 points on Wednesday. Looking at Dow doing well later that evening, our markets gained intraday on Thursday about 900 points but closed with gains of a mere 33 points. Friday was a big red day with losses of 870 points. Markets have broken key support zones in the previous week and we can expect some recoveries at best in the coming days. For the trend to change to positive it would be a long haul and we would need big news flow for that to happen.
The issue from LIC has opened and has been oversubscribed 1.63 times as of Saturday. There are 53.87 lac forms in the retail category which have been received. This is a new record for itself in terms of retail subscription. The issue is open for bidding on Sunday and the last day is Monday. There is a group of people who believe that shares of LIC would be available at a substantial discount to the issue price in less than six months. While each person is entitled to their own opinion, would like to just make two points here. The first is that there would be no dilution beyond the 3.5 per cent through this issue for a period of a minimum 12 months. Second the present EV or Embedded value is based on 5 per cent of profits being kept aside for shareholders. This would increase to 7.5 per cent and then to 10 per cent in the next two years. When profit component increases, the EV value increases. Take your call and use the last day to subscribe or choose to stay away.
The week ahead would see shares of Campus Activewear Limited list on May 9 and shares of Rainbow Children’s Medicare Limited list on May 10. These two issues would be the first under the new rules of subscription of HNI bucket and RBI rule of 1 crore limit for HNI’s.
The week ahead has two primary issues as well with the issue from Prudent Corporate Advisory Services Limited tapping the markets with its offer for sale of 85.49 lakh shares in a price band of Rs 595-630. The issue which has a size of Rs 538 crore would open on May 10 and close on May 12. The company is primarily a distributor of products manufactured by mutual funds and caters to authorised advisors and also to individual investors directly. The company has increased its AUM from Rs 32,000 as of March 31, 2021, to Rs 48,000 crore at the end of December 21. There is a one-off item of acquisition of Rs 8,000 crore from Karvy at the end of November 21 at a cost of Rs 150 crore. This acquisition generates a revenue or yield of 65 basis points for Prudent. The company has earned and EPS of Rs 13.94 for the nine months ended December 21. Annualising the same for the 12 months and considering an additional income for the Rs 8,000 crs acquisition, the EPS for the full year 21-22 would be around Rs 19.50. At this EPS the PE band is 30.5-32.30. Considering the fact that the recently listed issue from Anand Rathi Wealth Limited reported an EPS of Rs 30.18 for FY22 and is trading at a PE multiple of 20.84 which is substantially cheaper, investors may form a valued opinion and make their own choice.
The second issue is from Delhivery Limited which is tapping the markets with its fresh issue for Rs 4,000 crore and an offer for sale of Rs 1,235 crore in a price band of Rs 462-487. The issue would open on May 11 and close on May 13. Delhivery is the largest integrated logistics player and reported revenues of Rs 4,810 crore for the nine months ended December 2021. It has made seven acquisitions in this nine-month period and the full revenue impact based on current revenues would see a revenue increase of roughly Rs 300 crore per quarter going forward. The company has been incurring losses since inception and even for the nine-month period it lost roughly Rs 890 crore which included a non-cash item of Rs 299 crore.
While the logistics business in India is highly fragmented and the opportunity for the segments in which Delhivery is present is over 300 billion dollars, its present revenue is still to cross 1 billion. The opportunity is there, the company has spent in acquisitions and setting up the infrastructure. It has also learnt the ropes over the last few years. Turning the opportunity into sustainable profits maybe some time away. How long? A question which has no answer currently. In the shorter term look at Blue Dart Express Limited which has revenues of Rs 4,400 crore in 12 months ended March 2022 and a profit after tax of Rs 376 crs. The EPS is Rs 158.65 and the market cap Rs 16,219 which is less than half of Delhivery at Rs 35,000. Makes sense to invest in two shares of Blue Dart which would translate into Rs 13,670 against a lot of Rs 14,610 for Delhivery. Allow the share to list and wait for the turnaround in Delhivery and time your switch.
Coming to the markets in the week ahead. We are passing through tough times and FII’s seem to sell non-stop irrespective of markets. With key supports broken, one can only expect markets to bounce to regain some of the lost ground. Expect immediate resistance at levels of 56,000 and then at 57,000 on BSESENSEX and at 16,850 and then at 17,100 on NIFTY. This does not suggest that these are immediate targets but what could be levels in the medium term. The strategy would be to sell on strong rallies and buy on dips with traders avoiding overnight positions. The US markets are currently worrisome and do not provide clues as to how they would fare.
Trade cautiously and use large swings on the downside to buy and upswings to sell. Being patient would always help and with the pent-up demand of primary issues likely to tap markets, pick and choose to tap the markets.
The rate futures market is pricing in a 75 per cent chance of a 75 basis-point lift-off in June and a further 200 basis points of hikes this year…reports Asian Lite News
The rupee weakened to hit a fresh all-time low early on Monday, trading beyond 77.40 per dollar, driven by investors’ preference for safety as lockdowns in China, war on the edge of Europe and fear about higher interest rates sent a nervous jolt through markets.
While on Friday, the Indian currency ended close to its all-time lows of 77.05 hit in March, it weakened sharply today and was last trading at 77.42 per dollar, according to the latest quote from PTI and Reuters.
The flight-to-safety trades have pushed the dollar strength, with bids for the greenback accentuated since Russia attacked Ukraine late in February on supply disruption fears leading to runaway inflation and higher global interest rates, bringing forward the next recession.
The dollar scaled close to its two-decade highs, gaining for a fifth consecutive week after the Federal Reserve hiked its benchmark funds rate by 50 basis points and strong jobs data on Friday there reinforced bets on further big hikes.
The rate futures market is pricing in a 75 per cent chance of a 75 basis-point lift-off in June and a further 200 basis points of hikes this year.
US inflation data this week and several Fed policymakers scheduled to speak will keep the hawkish rhetoric in place as the Russia-Ukraine in its third month shows no signs of letting up, boosting expectations for the dollar to be well-bid.
The net capital outflows have not helped the Indian currency, with foreign investors pulling out over ₹ 6,400 crore from the Indian equity market in the first four trading sessions in May and remaining net sellers for seven months to April 2022.
That has weighed on the Indian currency when international crude prices have risen sharply and traded above $100 on average for the third month on supply disruptions from the Russia-Ukraine war.
The widening trade bill as the country imports 85 per cent of its oil needs, a stronger dollar, elevated crude prices, surging inflation and expected tighter monetary policy have spooked investors.
While the RBI, in an emergency meeting last week, hiked its key interest rates, runaway inflation risks are rising even as fears of a slowdown in economic growth activity persist.
“With central banks worldwide pressing the panic button and increasing interest rates. Foreign investors continue to sell relentlessly,” Vijay Singhania, Chairman at TradeSmart, told PTI.
Despite the RBI raising rates, the expected interest rate differential dynamic and flight-to-safety trades point to a gloomy mood.
“A series of rate hikes and hawkish communication came against a backdrop of plummeting Chinese and European activity, new plans for Russian energy bans and continued supply-side pressures,” warned analysts at Barclays, Reuters reported.
“This creates the gloomy prospect of persistent inflation forcing central banks to hike rates despite sharply slowing growth.”
Indian bourses too started May on a weak note, after losing over 2 per cent in April. With inflation data for April due and International developments not too appealing, broad investor sentiment points to more downside.
“We are victims of that time when the rupee is hitting an all-time- low due to multiple reasons. To describe a few points- a stronger USD, weaker Asian currencies, rebound in oil prices, ongoing Russia-Ukraine war, FII outflow, and a surprise hike by the RBI to tackle inflation could be the major reasons,” noted CR Forex Advisors.
“Friday’s job report boosted the US yield and thus the DXY (dollar index). Moving forward, the RBI’s intention will be closely watched,” added CR Forex Advisors.
India’s forex reserves crashes
India’s foreign exchange (FX) reserves fell below $600 billion for the first time in a year, weighed by persistent capital outflows and the rupee’s weakness driven by the dollar’s broad surge in recent months.
The latest data from the Reserve Bank of India (RBI) showed the country’s FX reserves fell by $2.695 billion to $597.728 billion, marking the eighth straight week of declines. The last time the country’s import cover fell below the $600-billion-mark was during the week ending May 28, 2021.
The latest week’s data was also the lowest since end-April last year when the country was battling its worst wave of the coronavirus pandemic. Back then, hospitals across the country were scrambling for beds and oxygen in response to a deadly second surge in infections; the World Health Organization (WHO) had said in a report that India accounted for nearly half the coronavirus cases reported worldwide and a quarter of the deaths during that period.
This year, though, the fallout from the Russia-Ukraine war has weighed on global supply chains, leading to runaway inflation and, in turn, has forced major central banks on a tightening policy path.
India’s forex reserves have declined nearly $34 billion, or about 5.4 per cent, since Russia invaded Ukraine on February 24. That import cover wiped out in just two months is about what the country took to build in a year.
The fall in FX reserves started during the week ending March 11, when the rupee hit its all-time lows.
The Indian currency’s weakness was driven largely by the greenback’s broad surge led by expectations of a very aggressive US Federal Reserve’s monetary policy path and the RBI’s intervention through dollar sales by Indian state-run banks.
While the import cover is still a healthy near-$600 billion, it has fallen to its lowest in a year, and the latest trade moves in the rupee point to further erosion of the country’s FX war chest.
The Pak currency dropped 0.48 pert cent (or Re 1) to a new historic low beyond the important threshold of Rs 186 against the US dollar in the inter-bank market on Wednesday…reports Asian Lite News
The Pakistani rupee hit a record low of Rs 186.13 against the US dollar on Wednesday, compared to Rs 185.23 on the previous working day, according to the data released by the State Bank of Pakistan (SBP), Geo News reported.
The Pak rupee has maintained a non-stop downward streak for the 16th successive working day except on March 24, when it closed flat compared to the previous day’s closing with investors worried about the political situation and economy, adding pressure on the central bank to rescue the falling currency.
The Pak currency dropped 0.48 pert cent (or Re 1) to a new historic low beyond the important threshold of Rs 186 against the US dollar in the inter-bank market on Wednesday.
The latest decline in rupee was seen after the Pakistan Bureau of Statistics (PBS) reported a significant surge of 70 per cent in trade deficit to $35.4 billion during the first nine months (July-March) of the current fiscal compared to the same period last year.
Besides, the International Monetary Fund (IMF) placed the ongoing $6 billion loan programme on hold for the third time in wait for the new government.
The IMF, however, clarified that it would engage to promote macroeconomic stability and looked forward to continuing its support to Pakistan.
The rupee has maintained a downward trend for the past 11 months. It has lost 22.23 per cent (or Rs 33.86) to date, compared to the record high of Rs 152.27 recorded in May 2021.
“Rising inflation is a concern across the globe and does not see an immediate solution which shall keep the currency weaker.”…reports Rohit Vaid
Inflationary concerns over elevated commodity prices are expected to maintain pressure on the Indian rupee during the upcoming week.
Accordingly, high crude oil as well as other raw material prices are expected to unleash a domestic inflationary wave.
This trend, said senior analysts, will dent growth prospects along with leading to an eventual rise in interest rates.
However, fiscal end dollar selling by software majors will arrest any sharp downfall in rupee value against the USD.
Consequently, the Spot USDINR is expected to settle in the range of 76 to 76.50 for the next week.
“Crude and rising US yields kept the rupee weak amid Ukraine war concerns,” said Sajal Gupta Head Fx & Rates Edelweiss.
“Rising inflation is a concern across the globe and does not see an immediate solution which shall keep the currency weaker.”
Last week, the rupee depreciated by half a per cent amidst a strong US dollar, higher crude oil and weaker risk sentiments.
The rupee closed at 76.20 to a greenback after swinging between 75.80 and 76.50 to a USD.
“Biggest driver remains crude oil prices and sentiment towards equity markets,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.
“We expect RBI to keep utilising its large forex reserves to keep the INR stable at around current levels. The bias for USDINR remains skewed to the upside following continued geopolitical worries and broad-based selling by foreign institutions.”
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.
Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, said: “Next week, on the domestic front, market participants will continue to monitor how crude prices will be moving and at the same time, FIIs participation will be important to watch.
“Fiscal deficit and trade balance number will also be released next week and will be influencing the rupee.”
Russian Finance Minister Anton Siluanov has denied reports that Moscow cannot fulfil its obligations under the public debt…reports Asian Lite News
India is planning to set up a mechanism to facilitate trade with Russia using local currencies, with a decision expected as early as next week, media reported.
People familiar with the matter told NDTV that the government was discussing how trade could be settled in rubles and rupees as Indian exporters are awaiting payments of about $500 million that have been stuck after the sanctions on Russian banks.
The central bank as well as commercial lenders including State Bank of India and UCO Bank Ltd. are being consulted, they said.
POUND (IANS)
Latest data show India’s bilateral trade with Russia stood at $10.8 billion, accounting for less than 1.5% of the South Asian nation’s total, the NDTV reported.
International sanctions and financial restrictions on Russia after its invasion of Ukraine are disrupting supply chains and driving up commodities prices, which add to the inflation problems of developing economies such as India.
Under the proposed mechanism, ruble could be deposited into an Indian bank after converting it into rupee and vice versa. There are some concerns, however, on how to peg the currencies, and also on ways to balance the trade as India is a net importer of Russian goods, which include defense equipment, it was reported.
We have enough funds: Russia
Russian Finance Minister Anton Siluanov has denied reports that Moscow cannot fulfil its obligations under the public debt.
“Statements that Russia cannot fulfil its obligations under the public debt do not correspond to reality. We have the necessary amount of funds to service our obligations,” the Ministry’s press service quoted the Minister as saying.
Russia is also ready to make payments in rubles at the exchange rate of the Bank of Russia on the date of payment, he noted.
“Moreover, for issues of Eurobonds issued since 2018, such an opportunity was laid down directly in the issuance documents,” Siluanov recalled referring to payment in ruble.
Russian Finance Minister Anton Siluanov (IANS)
The Ministry of Finance will additionally inform about the fulfilment of their obligations by agent banks under the terms of Eurobond issues.
Earlier in the day, Siluanov told local media that nearly half of the country’s roughly $640 billion of gold and foreign currency reserves have been frozen in the wake of Moscow’s ongoing war on Ukraine.
The Russian authorities will closely monitor inflation and the state of the country’s pensions, Siluanov noted.
“Of course, we have enough money to ensure the production of vital goods. The Central Bank will provide the necessary liquidity to the financial system,” he said.
Since Russia started the war on February 24, there has been an onslaught of Western economic sanctions, including asset freezes, in response.
Market participants are expected to track macro-data such as the Index of ECI (eight core industries) and fiscal deficit numbers which will be released during the trade week starting December 27….reports Asian Lite News
Fresh FIIs’ inflows for upcoming IPOs as well as lower crude oil prices are expected to strengthen the Indian rupee during the upcoming week.
However, concerns over Covid-19 variant — Omicron — will keep the Indian rupee’s strength in check.
“Last week of December is strong for rupee and Indian equities on a last 10-year track record,” said Sajal Gupta, Head, Forex and Rates at Edelweiss Securities.
“Oil prices are expected to be below $80 per barrel in near future on a slow down in demand on back of Omicron re-emergence. Possibility of bond index inclusion and IPO flows shall be helpful.”
Last week, the rupee covered lost ground on the back of decisive intervention by the RBI and slowed FPI redemption in Indian equities.
Gupta expects Indian rupee to test 74.50 this week on a strong note.
Rupee had closed at Rs 75.03 to a USD on Friday after a strong show.
“On the domestic front, investors will be keeping an eye on the fiscal balance number and increased expenditure could restrict sharp appreciation for the rupee,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“FII participation has been subdued in the last few sessions, but increased inflow as we get into the New Year could further support the currency.”
Market participants are expected to track macro-data such as the Index of ECI (eight core industries) and fiscal deficit numbers which will be released during the trade week starting December 27.
Somaiya expects the USDINR (Spot) to quote in the range of 74.70 and 75.80 next week.
According to Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities: “As it’s a holiday season in the US, most major currency pairs are going to trade in a narrow range for the next few sessions.”
“Rupee is likely to trade in a narrow range between 74.8 to 75.3 for the next few sessions.”
