RBI’s efforts to stabilise rupee hit country’s forex reserves: Experts

Aug 17, 2018 0

Mumbai– A strong US dollar and subsequent interventions by the country’s central bank to stabilise the rupee drained over $1.80 billion from India’s foreign exchange (forex) reserves, analysts said on Friday.

As per the Reserve Bank of India (RBI) weekly statistical supplement, the overall forex reserves plunged by $1.82 billion during the week ended August 10 to $400.88 billion from $402.70 billion reported for the week ended August 3.

According to Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, the decline in Forex reserves can be attributed to the RBI’s intervention to stem the decline in rupee’s fall.

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.

India’s forex reserves comprise of foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and the RBI’s position with the International Monetary Fund (IMF).

In recent days, factors such as geo-political developments, wider trade deficit, along with outflow of foreign funds have pulled the Indian rupee to fresh record intra-day and closing lows.

On Thursday, the Indian rupee had plunged to an intra-day low level of 70.39-40 — its lowest ever mark — against the greenback prompting automobile manufacturers and other import dependent sectors to raise prices.

It settled at a record closing low of 70.16 against the US dollar on Thursday.

Segment-wise, FCAs — the largest component of the Forex reserves — receded by $1.94 billion to $376.26 billion during the week under review.

Besides the US dollar, FCAs consist of nearly 20-30 per cent of major global currencies. The individual movements of these currencies against the US dollar impacts the overall reserve value.

“A consistent decline in reserves show that the RBI is continuously intervening in the market to protect the rupee,” Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers, told IANS.

“Another reason is the fact that foreign currency assets include the effect of appreciation or depreciation of the currencies such as Euro, Pound etc held in the reserves. Since Euro and Pound both have depreciated sharply in recent months, the fall in valuation is also the reason for decline in the reserves.”

However, the value of the country’s gold reserves increased by $145.6 million to $20.69 billion.

The country’s SDRs’ value slipped by $9.2 million to $1.46 billion, while the country’s reserve position with the IMF inched down by $9.2 million to $2.45 billion.¬† (IANS)

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India’s forex reserves deplete by over $1.80 bn

Aug 17, 2018 0

Mumbai– India’s foreign exchange (Forex) reserves plunged by $1.82 billion during the week ended August 10, official data showed on Friday.

According to the Reserve Bank of India (RBI) weekly statistical supplement, the overall forex reserves plunged to $400.88 billion from $402.70 billion reported for the week ended August 3.

India’s forex reserves comprise of foreign currency assets (FCAs), gold reserves, special drawing rights (SDRs) and the RBI’s position with the International Monetary Fund (IMF).

Segment-wise, FCAs — the largest component of the Forex reserves — receded by $1.94 billion to $376.26 billion during the week under review.

Besides the US dollar, FCAs consist of nearly 20-30 per cent of major global currencies.

However, the value of the country’s gold reserves increased by $145.6 million to $20.69 billion.

As per the data, the SDRs’ value slipped by $9.2 million to $1.46 billion, while the country’s reserve position with the IMF inched down by $9.2 million to $2.45 billion. (IANS)

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Global cues lift equity indices; Nifty closes at record level

Aug 17, 2018 0

Mumbai– Investor sentiments in the Indian equity market firmed up on Friday with the NSE Nifty50 ending at a record closing level, following broadly positive cues in the global markets.

The benchmark S&P BSE Sensex breached the 38,000-mark during the day before closing slightly below the psychological mark.

Index-wise, the Nifty50 on the National Stock Exchange closed at 11,470.75 points, up 85.70 points or 0.75 per cent from its previous close.

The S&P BSE Sensex, which had opened at 37,898.60 points, closed at 37,947.88 points, up 284.32 points or 0.75 per cent from previous close of 37,663.56 points.

It touched an intra-day high of 38,022.32 points and a low of 37,840.16.

In the broader markets, the S&P BSE Mid-cap rose by 0.88 per cent and the S&P BSE Small-cap ended higher by 0.94 per cent from the previous close. The BSE market breadth was bullish with 1,629 advances and 1,076 declines.

“The gains came on the back of positive Asian markets as investors seemed to cheer Washington and Beijing’s decision to hold trade talks next week,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

Investment-wise, provisional data with exchanges showed that foreign institutional investors bought scrip worth Rs 147.31 crore and the domestic institutional investors purchased stocks worth Rs 151.89 crore.

Sector-wise, the S&P BSE Banking index rose 398.95 points, FMCG index was up 219.19 points and the metal index ended higher 216.43 points from its previous close.

In contrast, the S&P BSE oil and gas index was the only losing index with a decline of 22.55 points.

In a major development, share price of FMCG major ITC on the BSE touched a 52-week high of Rs 315.20 on Friday. It settled at Rs 313.75 per share, higher Rs 6.95 or 2.27 per cent from the previous close.

The major gainers on the Sensex were Yes Bank, up 3.76 per cent at Rs 392.95; State Bank of India, up 3.18 per cent at Rs 302; Vedanta, up 3.09 per cent at Rs 215; Hindustan Uniliver, up 2.63 at Rs 1,780.80; and Tata Motors, up 2.47 per cent at Rs 257.35 per share.

The major losers were Hero Motocorp, down 1.14 per cent at Rs 3,248.60; ONGC, down 0.61 per cent at Rs 163.10; Maruti Suzuki, down 0.58 per cent at Rs 9,148.30; Coal India, down 0.44 per cent at Rs 281.20; and HDFC, down 0.39 per cent at Rs 1,883.60 per share. (IANS)

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Trade deficit depreciates Indian rupee to a fresh low; closes at 70.16

Aug 16, 2018 0

New Delhi/Mumbai– A wider trade deficit, along with outflow of foreign funds pulled the Indian rupee to a fresh record intra-day and closing low on Thursday.

The Indian rupee had plunged to an intra-day level of 70.39-40 — the lowest ever mark — against the greenback prompting automobile manufacturers and other import dependent sectors to raise prices.

It settled at a record closing low of 70.16 against the dollar, weakening by 26 paise from Tuesday’s close of 69.90 a US dollar.

“Dollar/Rupee closed above 70 levels on spot, a record low closing on a daily and weekly basis,” said Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities.

“Interestingly, today the rally in USD/INR occurred inspite of the recovery in Chinese Yuan and also Turkish Lira and also other EM (emerging markets) currencies. Rupee unable to take any positive cues from lower oil prices and even a rebound in the majors, Euro and GBP.”

Recent US sanctions and tariffs on Turkey had an impact on its and other emerging market currencies over fears of further global protectionist measures.

Further, data released by the Ministry of Commerce and Industry on Tuesday had shown that India’s merchandise trade deficit widened to $18.02 billion during last month as against $11.45 billion in the corresponding period the previous year.

“India’s trade deficit has widened sharply… This is a trigger for today’s fall in the rupee. Even though the Turkish Lira has recovered, the dollar index continues to move higher. Rupee is expected to remain under pressure in next few sessions,” Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers, told IANS.

“Even if the rupee appreciates, the appreciation won’t sustain for long due to global uncertainty.”

Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.

Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs 825.08 crore, while the domestic institutional investors bought stocks worth Rs 133.78 crore.

Even the Indian equity market was subdued as the rupee plunged.

Index-wise, the wider Nifty50 of the National Stock Exchange (NSE) closed at 11,385.05 points, down 50.05 points or 0.44 per cent from its previous close of 11,435.10 points.

The barometer 30-scrip S&P BSE Sensex closed at 37,663.56 points, down 188.44 and 0.50 per cent from its previous close of 37,852 points on Tuesday.

“Markets corrected on Thursday as they failed to sustain at the highs of the day. Banks and metal stocks (due to falling commodity prices) led the fall,” Deepak Jasani, the Head of Retail Research at HDFC Securities, said.

“Indian rupee fell in the morning and again in the afternoon….”

Besides, the stock market, automobile majors such as Maruti Suzuki India and Mercedes-Benz India announced a price rise.

“Yo-yoing of the Indian rupee and volatility is further exacerbating uncertainty for the exporters, as any real impact on exports would get muted from several factors such as all-round depreciation of currencies of all the emerging markets, and increase in raw material costs for the exporting consignment,” Ravi Sehgal, Chairman of the Engineering Export Promotion Council (EEPC) India was quoted as saying in a statement. (IANS)

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Record low rupee subdues equity indices; banking stocks fall

Aug 16, 2018 0

Mumbai– Sentiments in the Indian equity market weakened on Thursday with the rupee hitting fresh lows.

Further, decline in the global markets subdued the domestic indices, analysts said.

The rupee touched a record low of 70.39-40 against the dollar on Thursday tracking weakness in its global peers. It settled at a record closing low of 70.16 against the dollar, weakening by 26 paise from Tuesday’s close of 69.90 a US dollar.

Index-wise, the wider Nifty50 of the National Stock Exchange (NSE) closed at 11,385.05 points, down 50.05 points or 0.44 per cent from its previous close of 11,435.10 points.

The barometer 30-scrip S&P BSE Sensex closed at 37,663.56 points, down 188.44 and 0.50 per cent from its previous close of 37,852 points on Tuesday.

The barometer touched an intra-day high of 37,891.92 points and an intra-day low of 37,634.13 points.

In the broader markets, the S&P BSE Mid-cap fell by 0.48 per cent and the S&P BSE Samll-cap ended lower by 0.20 per cent from the previous close.

“Markets corrected on Thursday as they failed to sustain at the highs of the day. Banks and metal stocks (due to falling commodity prices) led the fall,” Deepak Jasani, the Head of Retail Research at HDFC Securities, said.

“Indian rupee fell in the morning and again in the afternoon….”

Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs 825.08 crore, while the domestic institutional investors bought stocks worth Rs 133.78 crore.

Sector-wise, the S&P BSE Healthcare rose 140.83 points, the IT index was up 86.25 points and auto index ended higher 71.81 points.

In contrast, the S&P BSE metal index declined by 282.83 points, followed by the consumer durables index, which was down 211.72 points and the banking index ended lower 203.22 points.

The major gainers on the S&P BSE Sensex were Sun Pharma, up 2.98 per cent at Rs 619.60; Bharti Airtel, up 1.51 per cent at Rs 372.05; Infosys, up 1.17 per cent at Rs 1,425.30; Tata Motors, up 0.99 per cent at Rs 251.15; and Axis Bank up 0.90 per cent at Rs 623.85 per share.

The major losers were Kotak Mahindra Bank, down 3.62 per cent at Rs 1,244.90; Vedanta, down 3.05 per cent at Rs 208.55; HDFC, down 2.61 per cent at Rs 1,890.90; Tata Steel, down 1.87 per cent at Rs 568.10; and Larsen and Toubro, down 1.6 per cent at Rs 1,232.95 per share. (IANS)

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Rupee devalues to record low of 70 to a USD; recovers

Aug 15, 2018 0

Mumbai– Geo-political pressures, along with outflows of foreign funds and high crude oil prices dragged the Indian rupee to its lowest ever intra-day level of over 70 against a US dollar on Tuesday.

On Tuesday morning, the Indian currency plunged to 70.08 — the lowest ever — against the greenback.

However, a likely intervention by the Reserve Bank of India and stabilisation in the global currency markets pared the rupee’s early fall.

At the end of the intra-bank trade session on Tuesday, the Indian rupee strengthened by four paise at 69.90 against the dollar, compared to Monday’s close of 69.94 per greenback.

“A near 4 per cent intra-day rebound in the Turkish Lira, on the back of talks between NSA from USA and Turkish Ambassador to US, was not enough to prevent the rupee from sliding past 70 handle against the greenback,” said Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities.

“RBI intervention has kept the pair below 70 since then on spot. However, demand from offshore speculators and also demand from importers have not allowed the rupee to appreciate.”

Banerjee pointed out the trend in USD/INR for the rest of the week will be dictated by the trend in greenback against major currencies like Euro and GBP.

Recent US-imposed sanctions and tariffs on Turkey has had an impact on its and other emerging market currencies over fears of further global protectionist measures.

“Since currencies of emerging and developed markets are falling, the RBI is not intervening aggressively in the market. It is intervening selectively to contain volatility,” Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers, told IANS.

“Since 70 level has been breached today we may see importers rushing to buy dollars on every dip in the USD/INR. On the other hand exporters may avoid selling dollars at current levels as the rupee is depreciating sharply.”

Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.

Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs 378.84 crore.

“The swift move past 69 happened due to Foreign Institution Investor (FII) outflows and the need to hedge existing short dollar positions in the market, driven by global market sentiment rather than actual importer demand,” said B. Prasanna, Group Executive and Head for Global Markets Group, ICICI Bank.

“On a medium term basis, the rupee will need to depreciate further to keep up with the inflation differentials with other trading partners. However there could be a minor reversal of this depreciation on a short term basis when the global situation stabilises.” (IANS)

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Easing wholesale inflation firms up investor sentiment, lifts equity indices

Aug 14, 2018 0

Mumbai– After two consecutive days of decline in the Indian equity market, investor sentiments strengthened on Tuesday with the wholesale inflation easing in the month of July.

Both key indices — S&P BSE Sensex and the NSE Nifty50 — traded on positive note through out the day supported by a robust buying in healthcare and banking stocks, analysts said.

India’s annual rate of inflation based on wholesale prices eased to 5.09 per cent in July from a high of 5.77 per cent in June, official data showed on Tuesday.

The wider Nifty50 on the National Stock Exchange (NSE) closed at 11,435.10 points, higher 79.35 points or 0.70 per cent from the previous close.

The 30-scrip BSE Sensex closed at 37,852 points, higher 207.10 points or 0.55 per cent from the previous close of 37,644.90 points.

It touched an intra-day high of 37,932.40 points and a low of 37,689.71 points.

In the broader markets, the S&P BSE Mid-Cap rose by 0.89 per cent and the S&P BSE Small-Cap index ended 0.53 per cent higher from its previous close. The BSE market breadth was slightly tilted towards the bears with 1,390 declines and 1,302 advances.

“Positive macro-economic updates coupled with bargain hunting at lower levels after two sessions of losses gave a fillip to investor sentiment,” said Abhijeet Dey, Senior Fund Manager for Equities at BNP Paribas Mutual Fund.

“Following yesterday’s positive growth numbers, the lower inflation numbers released subsequently were viewed as a positive development by investors,” he added.

According to Deepak Jasani, the Head of Retail Research at HDFC Securities, the bounce-back came on the back of bargain hunting by investors and better European markets. Turkish Lira recovered by five per cent against the dollar leading to some stability in sentiments towards emerging markets, Jasani told IANS.

The Indian rupee, also recovered and ended four paise stronger at 69.90 against the dollar, compared to the Monday’s close of 69.94 per greenback.

However, earlier in the day, the rupee crossed the 70-per-dollar mark and touched a new all-time low of 70.08 per dollar.

Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs 378.84 crore, while the domestic institutional investors bought stocks worth Rs 391.47 crore.

Sector-wise, the S&P BSE Healthcare rose 354.91 points, the banking index was up 302.46 points and auto index ended higher 132.72 points.

In contrast, the S&P BSE capital goods index declined by 92.18 points, followed by the industries index, which was down 7.26 points and the telecom index ended lower 3.96 points.

The major gainers on the S&P BSE Sensex were Sun Pharma, up 6.91 per cent at Rs 601.65; Yes Bank, up 2.87 per cent at Rs 381.75; ICICI Bank, up 2.17 per cent at Rs 332.30; Axis Bank, up 2.15 per cent at Rs 618.30; and Reliance Industries up 2 per cent at Rs 1,210.95 per share.

The major losers were Hero Motocorp, down 1.29 per cent at Rs 3,263; Larsen and Toubro, down 1.19 per cent at Rs 1,253.50; Adani Ports, down 1.03 per cent at Rs 373.45; Tata Motors (DVR), down 0.70 per cent at Rs 135.40; and Bharti Airtel, down 0.66 per cent at Rs 366.50 per share. (IANS)

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Lower food prices cool India’s July wholesale inflation to 5.09%

Aug 14, 2018 0

New Delhi– Lower prices of food items and primary goods decelerated rise in India’s annual inflation rate based on wholesale prices to 5.09 per cent in July from 5.77 per cent in June, official data showed on Tuesday, a day after retail inflation for July too softened to 4.17 per cent.

The data on the Wholesale Price Index (WPI) furnished by the Commerce Ministry showed that the rate of inflation had increased to 1.88 per cent during the corresponding month in 2017.

“Build-up inflation rate in the financial year so far was 2.92 per cent compared with 0.62 per cent in the corresponding period of the previous year,” the Ministry said in a statement here.

On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, inched up by 1.73 per cent, from an increase of 5.30 per cent in June 2018.

Similarly, the prices of food articles dipped. The category has a weightage of 15.26 per cent in the WPI index. It deflated by (-) 2.16 per cent from a rise of 1.80 per cent.

However, the cost of fuel and power category, which commands a 13.15 per cent weightage, increased at a faster pace of 18.10 per cent from a growth of 16.18 per cent.

In addition, expenses on manufactured products registered a rise of 4.26 per cent from 4.17 per cent.

On a year-on-year (YoY) basis, onion prices soared higher by 38.82 per cent and for potatoes by 74.28 per cent.

In contrast, the overall vegetable prices in July declined by 14.07 per cent, against a rise of 22.01 per cent in the same month a year ago.

Further, the data revealed that wheat became dearer by 6.31 per cent on a YoY basis while prices of pulses came down by 17.03 per cent, though paddy became expensive by 3.96 per cent.

The prices of protein-based food items such as eggs, meat and fish went up marginally by 0.87 per cent.

Fuel-wise, the price of high-speed diesel rose by 22.84 per cent on a YoY basis, petrol by 20.75 per cent and LPG by 31.68 per cent.

Lower food prices eased India’s July retail inflation to 4.17 per cent from 4.92 per cent in June even as it continued to rule over the Reserve Bank of India (RBI)’s medium-term inflation target of 4 per cent, official data showed.

Continuing with the reversal of accommodation begun in June, the RBI earlier this month again hiked its key lending rate by 25 basis points to bring its repo rate to 6.50 per cent citing upside risks to inflation.

Commenting on the wholesale price numbers, the Confederation of Indian Industry welcomed it as “very good news”.

“Having benefited from the decline in primary articles, particularly food prices, hopefully, this is the beginning of a downswing in prices. The moderation in both CPI (consumer price index) and WPI inflation should induce the RBI to resume the benign interest rate regime,” CII Director General Chandrajit Banerjee said in a statement.(IANS)

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Tata Steel posts more than double net profit in Q1

Aug 13, 2018 0

Mumbai– Tata Steel on Monday reported more than double consolidated net profit at Rs 1,934 crore in the quarter ended June 30, as compared to Rs 921 crore in the year-ago period.

Its consolidated revenue from operations during the quarter was at Rs 37,833 crore, up 22 per cent from Rs 30,973 crore in the corresponding period last year.

Speaking on the company’s performance, its Executive Director and CFO Koushik Chatterjee said: “The performance in this quarter has been very strong and the India operation delivered a stand-out performance of 31 per cent EBIDTA margin on the back of strong underlying business performance and improved market conditions.”

“Our quarterly consolidated EBIDTA grew 33 per cent year-on-year and increased to Rs 6,559 crore, with an EBITDA margin of 17 per cent,” he said.

“We are working on seeking all relevant approvals for our 50:50 JV with thyssenkrupp for our European business. We expect underlying steel demand to be strong, particularly in India. However, the rising trade tensions and the impact on the global economic momentum is a cause of concern,” its CEO and Managing Director T.V. Narendran said.

During the quarter, the steel maker closed the acquisition process of Bhushan Steel under the Insolvency and Bankruptcy Code process, it said in a statement.

“The funding for the acquisition was designed with a prudent capital structure with significant equity component to ensure future value creation. The integration of the company is underway and is expected to deliver synergies over the next 24 months,” Chatterjee added.

Its board approved issue of debt securities of up to Rs 12,000 crore in the form of Non-Convertible Debentures (NCDs) on private placement basis in one or more tranches.

The funds will be primarily deployed towards capex, repayment of debt and general corporate purposes, it said in a regulatory filing. (IANS)

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Lower food prices cool India’s July retail inflation to 4.17%

Aug 13, 2018 0

New Delhi– Lower food prices eased India’s July retail inflation to 4.17 per cent from 4.92 per cent in June, even as it continued to rule over the Reserve Bank of India (RBI)’s medium-term inflation target of 4 per cent, official data showed on Monday.

However, on a year-on-year (YoY) basis, the Consumer Price Index (CPI) in July 2018 was higher than in the corresponding period last year, when retail inflation stood at 2.36 per cent.

According to the data furnished by the Central Statistics Office (CSO), the Consumer Food Price Index (CFPI) rose 1.37 per cent in July from 2.91 per cent in June 2018.

Product-wise, prices of milk-based products, eggs, meat and fish pushed the retail inflation higher on a YoY basis.

In contrast, deflation in the cost of vegetables, pulses and sugar capped the overall food prices.

Accordingly, the prices of milk-based products rose by 2.96 per cent, while cereals became dearer by 2.92 per cent and meat and fish prices recorded a rise of 2.26 per cent.

On the other hand, the category of “pulses and products” became cheaper by (-) 8.91 per cent and that of “sugar and confectionery” by (-) 5.81 per cent.

The sub-category of food and beverages during the month under consideration recorded a rise of 1.73 per cent over the same period last year.

Among non-food categories, the “fuel and light” segment’s inflation rate accelerated to 7.96 per cent in July.

Continuing with the reversal of accommodation begun in June, the RBI earlier this month again hiked its key lending rate by 25 basis points to bring the repo to 6.50 per cent citing upside risks to inflation.

Addressing the media on the hike in the repo, or the short-term lending rate for commercial banks, Governor Urjit Patel said its monetary policy committee (MPC) noted that the rise in retail inflation had continued for the third consecutive month.

“The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” the RBI said.

The central bank, however, maintained its “neutral” stance on policy, as it has done over five previous bi-monthly policy reviews which allows it to move either way on rates.

Commenting on the CPI numbers, Deloitte India Lead Economist Anis Chakravarty said in a statement: “Inflation continued to remain fuelled by higher oil prices as increasing levels of core inflation, especially housing, clothing, and miscellaneous activities. The movement in food inflation has also increased and is likely to follow an upward trajectory due to MSP increase.”

“Given that inflation remains above the medium term target of 4 per cent and the scales are tilted to the upside, the recent increase in key policy rate may provide some respite,” he added. (IANS)

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