MARKETS LIVE: Indices gain as rupee at 69.77/$, inflation drops

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SI Reporter  |  New Delhi  Last Updated at August 14, 2018 10:27 IST

Turkish Lira-led rout complicates RBI’s inflation-targetting job in India   There’s not a moment of respite for India’s inflation-targeting central bank. Just when gains in consumer prices eased, a renewed onslaught on the rupee amid a Turkish lira-led rout on emerging market currencies may require a response, and possibly more rate action.   A weaker currency complicates the Reserve Bank of India’s job of keeping prices in check. The monetary policy committee led by Governor Urjit Patel increased interest rates twice since June to curb rising price pressures, while the RBI depleted $23 billion in foreign reserves to check currency volatility. READ MORE   India most expensive for equity schemes? Morningstar clarifies its stance Is India really one of the most expensive markets for equity schemes as independent investment research firm Morningstar claims? Or is it actually the third least expensive, as contended by the distributor body Foundation of Independent Financial Advisors (Fifa)? According to Morningstar’s Global Fund Investor Experience (GFIE) 2017, of the 25 countries that were reviewed, India was among the most expensive for equity schemes. READ MORE Market Check INDEX LATEST PREVIOUS CHANGE CHANGE(%) NIFTY 50 11401.15 11355.75 45.40 0.40 NIFTY 500 9699.15 9656.50 42.65 0.44 NIFTY MIDCAP 100 19119.90 19012.40 107.50 0.57 NIFTY SMALL 100 7512.80 7463.65 49.15 0.66 INDIA VIX 13.19 13.40 -0.21 -1.57 > More on NSE Indices IIFL on Tata Steel Steel spreads have been healthy due to revival in demand and lower dumping from China. JV with ThyssenKrupp would be completed by end-FY19 and will enable the company to focus on growth opportunities in India. At the current run rate Bhushan steel operations can be cash positive (Ex. One-offs) from its first year of operations. Spreads would be marginally lower in Q2 as steel prices have corrected. We maintain our Buy recommendation with a revised target price of Rs.785 ICICI Securities on India Cements Backed by strong demand growth and resultant higher utilisation in India Cement’s key markets, the management expects sharp price recovery from H2FY19. We marginally reduce our FY19E-FY20E EBITDA by 2% and revise our target price to Rs120/share (earlier: Rs125/share) based on 8x Mar’20E EV/E. Maintain ADD, given attractive valuation of ~US$60/te. MARKET COMMENT Edeiweiss on currency India is much less vulnerable relative to other EMs (and certainly lower than 2013 QE tapering episode) in terms of external debt and current account deficit. Currently, the economy is improving, which is largely a reflection of normalization post-disruptions. Hereon, the recovery will essentially depend on exports trend (i.e. global growth) and domestic interest rates/liquidity. And if the global situation deteriorates, not only would exports slow down, but domestic liquidity too may dry up as the RBI drains liquidity to support INR (Q1FY19 intervention ~$15bn). This in turn would hurt corporate deleveraging and weigh on recovery

Benchmark indices are trading higher after rupee gained and India’s retail rate eased in July, strengthening views that the Reserve Bank of India (RBI) will keep interest rates on hold at its review in October after raising them for a second straight meeting on August 1.

In July, consumer prices rose 4.17 per cent from a year earlier, compared with a downwardly revised 4.92 per cent in June, the Statistics Ministry said on Monday.  Meanwhile, the rupee strengthened at open today,  moving away from its all-time lows after the Indian currency on Monday nosedived by Rs 1.09 to close at an all-time low of Rs 69.92 against the US dollar, bowing to a global rout in currencies on fears of an economic crisis in Turkey. was the biggest single-day fall in almost five years.

Stock-specific action will also continue with over 500 companies likely to announce their June-quarter results today. 

Globally, Asian tried to regain their footing on Tuesday as tremors from the collapse of the Turkish lira ebbed a little and proved resilient to the shockwaves.

Japan’s Nikkei led the early running with a gain of 1.0 per cent, while Australia added 0.4 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat having found support above the July low of 525.52.

First Published: Tue, August 14 2018. 08:15 IST

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