Money on the markets

from India Insight:

The rupee’s fall from grace

Indian milk and dairy products producer Amul’s campaign has a new subject -- the rupee.

The newspaper advertisement features the iconic Amul girl, in her polka dotted red dress, in a boat made of the rupee, about to sink in turbulent waters. She says ‘mujhe mere rupee se bachaao!’ in Hindi. Loosely translated into English, it would mean 'save me from my rupee.'

The tagline, tongue in cheek, says ‘valued highly’.

The Amul mascot’s angst today reflects that of investors who have so far been bullish on the India growth story.

That the rupee has caught the Amul girl’s attention is no surprise. For over thirty years, she has commented on social, political and economic issues of the day making her as favourite a household name as R.K. Laxman’s common man.

Be it the 'Hurry Amul, Hurry Hurry' campaign when Mumbai saw the beginning of the Hare Rama Hare Krishna movement. Or, the Indian Airlines strike which led Amul to say ‘Indian Airlines Won’t Fly Without Amul’ (seems a bit of déjà vu’, doesn’t it?)

from India Insight:

As the economy and markets struggle, India needs tough actions

Slowing growth, a falling rupee, sliding stock markets, a rising current account deficit, drying foreign inflows and policy paralysis at the centre. Things certainly don’t look rosy for India.

With the rupee down 22 percent in the last 10 months and a 6 percent drop in stock markets so far in May (as of Friday’s close), is it time for the government to seriously rethink its strategy ahead of the 2014 general elections?

From Mark Mobius, who said the Indian government has been making many big policy mistakes, to Lakshmi Mittal, who told The Times of India on Friday that decision-making is too slow and India needs to move the way the rest of the world does -- there is no dearth of criticism.

As the global economic environment continues to be weak, what is the government doing to address these issues? Right now, India badly needs reforms, foreign inflows, and most importantly, clarity and stability.

It took Finance Minister Pranab Mukherjee nearly two months to clarify his controversial set of General Anti-Avoidance Rule (GAAR) proposals, and also defer it by a year, after an investor backlash.

One wonders what took the government so long to issue clarifications, which could have helped revive much-needed inflows and improve sentiment. And even when it did, it failed to pacify investors.

As a Scotiabank executive summed it up -- India changes rules too quickly. They don't realise it hurts them in debt capital markets and hurts flows on a long-term basis.

LIVE BLOG: Sensex, Nifty plunge to 2011 lows

The BSE Sensex and Nifty plunged to fresh 2011 lows in Wednesday trade, a day before the expiry of derivatives contracts, amid renewed worries about faltering global growth.

Outsourcers slide on rising rupee

Shares in top IT firms plunged on concerns the rising rupee would squeeze margins in the export-driven sector.

IT bellwether Infosys dropped 2.5 percent, while Wipro and TCS fell 4.2 and 3.3 percent respectively.

TCS, which contributes 2.3 percent in the 30-Share Sensitive index, led the pack in terms of turnover, ending with volumes of nearly 14 million shares.

The BSE IT Index, which has gained nearly 100 percent so far this year, ended 2.7 percent lower in a broader market that closed 0.9 percent down at 16,806.

An increase in foreign inflows helped the partially convertible rupee gain 11.9 percent from its record low of 52.2 in early March.

The combined traded volumes on two exchanges (National Stock Exchange and MCX-SX) stood at about $2.7 billion.

Airline stocks face the heat

Airline stocks failed to bring cheer to the market on Monday after the Federation of Indian Airlines (FIA) called off plans for a one-day strike later this month.

Private airline operators had on Friday announced they would suspend operations on August 18 to protest the lack of government relief for the ailing industry.

India’s airlines suffered a cumulative $2 billion of losses in 2008/09 on high operating costs and a fall in demand amid a global slowdown.

Shares in Kingfisher dropped 2.3 percent, Spicejet ended down 1.3 percent while Jet Airways fell 2.37 percent.

Quarterly results have been a mixed bag for aviation firms with Kingfisher and Jet Airways posting Q1 losses.

Spicejet announced a net profit of 263.4 million rupees in the first quarter. Its shares rose 5.8 percent on results day.

The Indian civil aviation sector is showing an extraordinary growth rate in the last few years and is expected to grow by 25 percent year-on-year, as per the FIA website.

Sensex range bound in choppy trade

The Sensex remained volatile in trade and ended 0.08 percent lower on fears of a fall in corporate earnings for the June quarter.

IT bellwether Infosys Technologies, will kick off the earnings season on Friday.

The rupee weakened to 49/dollar, its weakest since May 18. It was down 2.2 percent on week early in opening trade.

The Wholesale Price Index fell 1.55 percent, with the primary and food article indices gaining and the fuel index remained unchanged. Manufacturing, however, slipped 0.1 pct.

The 30-share sensitive index swung from an intra-day high of 13,879 to an intra-day low of 13,643 and closed 11 points lower at 13,757. The fifty-share Nifty ended 0.05 percent higher at 4080.

On the sectoral front, the BSE Consumer Durable Index dropped 1.4 percent, followed by the Capital Goods Index which ended 1.07 percent lower. However, the BSE Metal Index closed 1.53 percent higher.

FIIs bought net $158.5 million in shares and sold $3.6 million in debt.

Reliance leads Sensex fall

The Sensex fell on Monday as an unfavourable court ruling saw a sell off in shares of Reliance Industries. Investor sentiments were also dampened by weak Asian markets.

The 30-share sensitive index swung from an intra-day high of 15,261 to an intra-day low of 14,808, and finally closed 362 points lower at 14,857. The fifty-share Nifty ended 2.1 percent lower at 4484.

The fall in the benchmark index was led by Reliance Industries, L&T and Sterlite Industries.

Sensex heavyweight Reliance Industries fell over 7 per cent after the Bombay High Court directed it to supply gas to former group firm Reliance Natural Resources at about half the government-approved price.

On the sectoral front, the BSE Oil & Gas Index dropped 4.5 percent, followed by the Metal Index which ended 3.8 percent lower. The BSE FMCG Index, however, ended higher at 0.58 percent.

On the global front, most Asian stocks registered a decline, pulling further from the 8-month high on renewed worries about the health of the global economy.

FIIs bought net $109.4 million in shares and $15.8 million in debt.

Sensex closes above 15000

The BSE Sensex seesawed today, erasing early losses of as much as 1.8 percent, and finally closed above the 15,000 mark on hopes of a revival in the economy. Higher European markets also helped lift investor sentiments.

The 30-share sensitive index of the Bombay Stock Exchange swung from an intra-day low of 14,601 to an intra-day high of 15,026, and finally closed 137 points up at 15,008. The fifty-share Nifty ended 0.93 percent up at 4572.

The main contributors to the benchmark’s rise were L&T, ICICI Bank, HDFC and Bharti Airtel.

The BSE Mid-Cap index continued its rally gaining 2.26 percent, while the BSE Small-cap index was up 2.23 percent.

On the sectoral front, the BSE Realty index was up 3.29 percent, followed by the Capital Goods Index which ended 3.23 percent lower. The BSE Metal Index, however, ended 2.1 percent lower.

FIIs sold net $67.5 million in shares and bought $46.6 million in debt.

Data released today showed that inflation rose 0.48 percent in the 12 months to May 23, lower than previous week’s annual rise of 0.61 percent.

Sensex gains in choppy trade

The Sensex ended nearly 200 points up on Wednesday as investors covered positions ahead of the monthly derivatives expiry.

The session was volatile throughout the day, with the benchmark gaining momentum towards the close of the trade.

The top gainers included Jaiprakash Associates, which gained 7.5 percent, Tata Power, which was up 7.1 percent, DLF which surged 6.2 percent and Reliance Industries, which was up 5.6 pct.

The realty sector saw good activity with Unitech (up16.7 percent) and DLF (up 6.2 percent) sending the BSE Realty Index higher by over 6 percent.

FII data showed a positive net investment in equities of $173.3 million, while a net selloff was seen in debt of $239.1 million

The rupee came off a one-week low, helped by the over 2 percent rise in the share market. The partially convertible rupee is now trading close to 51 per dollar. This volatility in the rupee is not a welcome sign for corporate India, as it will result in hedging losses and an appreciation in the rupee will result in depreciation of FII portfolio.

The 50-share NSE index ended 1.5 percent up at 2,984.35 after touching the day’s high of 2,996.