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Indian Stocks In Green After Touching Four-Week Low

By LokMarg 29th September 2023

Indian stock indices edged marginally higher on Friday morning after touching nearly a four-week low the previous session, tracking Asian peers and relatively firm overnight US market cues.

Benchmark Sensex and Nifty were 0.2 per cent higher each from their Thursday closing. Nifty metal, pharma, PSU bank sectoral indices were the top movers this morning.

“The ‘triple whammy’ of up-trending dollar, US bond yields and Brent crude is showing signs of easing. If this trend continues it will facilitate a recovery in markets. Stability in the US market yesterday also can be a supportive factor,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Lately, the indices slumped sharply after the US central bank, while keeping its interest rate steady in the September meeting, hinted that it may again hike rates going ahead if need be, in its fight against inflation.

Rising global crude oil prices and subsequent strengthening of the US dollar also weighed on the financial markets.

Going ahead, the RBI monetary policy scheduled for October 4-6 will be monitored closely by the investors. RBI typically conducts six bi-monthly meetings in a financial year, where it decides interest rates, money supply, inflation outlook, and various macroeconomic indicators.

RBI in its past three meetings – April, June, and August — held the repo rate unchanged at 6.5 per cent. The repo rate is the rate of interest at which RBI lends to other banks.

According to SBI Research, the monetary policy committee is expected to yet again pause the key repo rate.

“Domestically, we believe at 6.50%, we are in for a prolonged pause as seasonality of inflation is tapering first…,” SBI Research report, authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, said recently. (ANI)

Rupee Hits All-Time Low; Decline After 4-Day Gains

By LokMarg 20th October 2022

Indian stock indices, after having extended gains for the fourth straight session till the previous session, fell marginally on Thursday morning, tracking overnight weak sentiments from US markets.

Also, foreign capital outflows, widening current account deficit, and tightening monetary policy globally to tame inflation were some of the concerns among the investors’ community, analysts said.
At 9.56 am, Sensex traded at 58,962.18 points, down 145.01 points or 0.25 percent, whereas Nifty traded at 17,468.35 points, down 43.90 points or 0.25 percent.

“Sustained flows into mutual funds, particularly via the SIP route, is a major factor imparting strength to the market even in the context of negative global economic news. So long as DIIs are flush with funds markets are unlikely to correct sharply. Fundamental support to the market is coming from the good Q2 numbers, particularly from financials,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Meanwhile, the Indian rupee fell below 83 versus the US dollar for the first time on Wednesday as the US dollar continued to strengthen. The rupee plunged 61 points and closed at a record low of 83.01 against the dollar.

This morning, it opened near its record low.

Meanwhile, India’s forex reserves had dropped significantly, which is currently at a two-year low, because of RBI’s likely intervention in the market to defend the depreciating rupee.

Typically, the RBI intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. (ANI)

No Let-Up In Rupee Depreciation; Touches Another Lifetime Low

By LokMarg 26th September 2022

Continuing with the depreciation, Rupee slipped further from the past week’s low and hit another lifetime low on Monday morning. This consistent depreciation follows the ongoing strengthening of the US dollar index for a two-decade, on hopes that demand for safe-haven currency such as the dollar would pick up.

This morning, it crossed 81.50 against the US dollar. On Friday, it closed at 81.25. Notably, last Thursday’s depreciation was the biggest single-day fall for the rupee since February 24.
The latest monetary policy tightening by the US Federal Reserve also lent support to the dollar, thereby weakening other major currencies globally, including India’s rupee.

“The panic is created by the dollar index which witnesses strong buying as a strong hedge against interest rate hikes and inflation cycle. The rupee downtrend will continue as long as positive triggers are not witnessed from the inflation forefront. The next trigger for the rupee next week is the RBI policy which shall provide some respite to the rupee fall. Rupee range can be seen between 80.50-81.55 before RBI policy,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

For the record, the US Federal Reserve had raised the repo rate by 75 basis points — which is the third consecutive hike of the same magnitude, in line with expectations, which essentially means that investors will move towards the US markets for better and stable returns amid the monetary policy tightening. The Fed also hinted that more rate hikes were coming and that these rates would stay elevated until 2024.

The US central bank seeks to achieve maximum employment and inflation at the rate of 2 per cent over the long run and it anticipates that the ongoing hikes in the target range will be appropriate. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.

Consumer inflation in the US though declined marginally in August to 8.3 per cent from 8.5 per cent in July but is way above the 2 per cent goal.

Meanwhile, India’s forex reserves are at a two-year low. The reserves have dropped by almost USD 80 billion since the escalation of the Russia-Ukraine tensions into war earlier this year

India’s forex reserves have been consistently depleting for the past few months because of RBI’s likely intervention in the market to defend the depreciating rupee and for the country’s trade settlement. This depletion is yet another possible reason the rupee has been weakening.

Typically, the RBI intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. A depreciation in the rupee typically makes imported items costlier.

For fresh cues, investors await RBI’s upcoming monetary policy outcome. As per schedule, the next three-day monetary policy meeting will be held during September 28-30. (ANI)

Rupee Breaches 81 Mark For A New Lifetime Low

By LokMarg 23rd September 2022

Rupee tasted yet another lifetime low on Friday morning after the US dollar index strengthened to a two-decade high this week, on hopes that demand for safe-haven currency such as the dollar would pick up.

This morning, the Rupee opened 25 paise lower from the previous session to touch a record low of 81.09 versus the US dollar, against Thursday’s close of 80.86. Yesterday’s depreciation was the biggest single-day fall for the rupee since February 24.
The US Federal Reserve had raised the repo rate by 75 basis points — which is the third consecutive hike of the same magnitude, in line with expectations, which essentially means that investors will move towards the US markets for better and stable returns amid the monetary policy tightening.

The Fed also hinted that more rate hikes were coming and that these rates would stay elevated until 2024.

Consumer inflation in the US though declined marginally in August to 8.3 per cent from 8.5 per cent in July but is way above the 2 per cent goal.

Swastika Investmart, Research Head, Santosh Meena said it was apparent from the recent action and commentary of the US Federal Reserve that it was still far away from the end of the rate hike cycle, adding he reckons that the rupee is expected to remain under pressure despite the improvement in domestic economic prospects.

Meanwhile, India’s forex reserves are at a two-year low. The reserves have dropped by almost USD 80 billion since the escalation of the Russia-Ukraine tensions into war earlier this year

India’s forex reserves have been consistently depleting for the past few months, on account of RBI’s likely intervention in the market to defend the depreciating rupee.

Typically, the RBI intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.

A depreciation in the rupee typically makes imported items costlier.

“The Dollar Index may continue with its positive bias as the US Fed decided to raise interest rate by 75 bps, for a third consecutive month and signalled that it would continue to lift rates this year at a most rapid pace to combat inflation, which is running hot,” said ICICI Securities. (ANI)