Quick Rupee

The BSE Sensex ended up 2 percent on Wednesday to its highest close in a month, propelled by large banks as risk appetite improved globally and after quarterly results showed the outlook for domestic companies was not as bad as initially feared. Hero MotoCorp, India’s largest motorcycle maker, rallied as much as 5 percent after it beat street estimates with a 19 percent rise in quarterly profit and said it was confident of boosting sales. It closed up 4.06 percent. Credit Suisse and Bank of America have both forecast Hero MotoCorp’s margins to expand further due to a softening in commodity prices and increased production.

 “The corporate results that have come so far have shown better performance than market expectations,” said R.K. Gupta managing director at Taurus Asset Management. The main 30-share BSE index ended up 2.01 percent at 17,085.34 points, its highest closing level since Sept. 20, with all its components advancing. The BSE index has risen nearly 4 percent so far in October, but is down 16.7 percent this year as high borrowing costs squeezed corporate profits and a series of government scandals paralysed government policy making. HDFC Bank, the country’s No. 3 lender closed up nearly 3 percent at 491.85 rupees, after posting a 31.5 percent rise in quarterly profit, beating street estimates, on higher fee and net interest income and stable asset quality. Bigger rival State Bank of India was up 2.78 percent, and ICICI Bank gained 3.15 percent. Deutsche Bank said banking stocks were trading at trough valuations and named State Bank of India and HDFC Bank as its top picks in the sector.

Tata Motors, India’s largest truck maker, ended up 3.14 percent on hopes sales will continue to improve. The company, which also owns the premium Jaguar and Land Rover brands and the ultra-cheap Nano, had last week reported a 24 percent rise in global September sales. “The numbers have been quite good. That should be seen as a kind of game changer for Tata Motors because in this kind of an environment they are having robust sales both for JLR as well as domestic brands,” said Deven Choksey, CEO and managing director of K.R. Choksey. Still, the outlook for the market remains clouded by concerns over rising interest rates amid slowing growth. The Reserve Bank of India is widely expected to deliver another rate rise next Tuesday before pausing. It has already increased rates a dozen times since mid-March 2010 to fight high inflation. Taurus’ Gupta said the NSE index was likely to remain between 5,000 and 5,100 and unlikely to rise much in the next two or three sessions as the markets would wait for domestic triggers from the Indian central bank’s policy review next Tuesday, followed by the monthly derivative contracts expiry. “It’s a difficult call for markets, there is a lot of uncertainty before next week’s events,” he said. Reliance Industries, India’s largest listed firm closed up 2.82 percent.

The stock has fallen about 20 percent since the beginning of the year as its growth outlook has been marred by falling gas output from its huge gas fields off the eastern coast. The 50-share NSE index ended up 2.02 percent at 5,139.15 points. In the broader market, there were 942 gainers for 480 losers on total volumes of 543.2 million shares. European stocks and the euro rose, on optimism policymakers will take major steps at a summit this weekend to solve the festering debt crisis and offsetting the impact from a cut to Spain’s sovereign credit rating. World stocks as measured by MSCI gained 0.75 percent, while emerging equities were up 1.16 percent. STOCKS ON THE MOVE * Crompton Greaves fell over 12 percent as the company’s consolidated net profit for July to September declined a more-than-expected 25.3 percent. * Construction firm IVRCL Ltd rose 4.2 percent after it said it got orders worth 5.52 billion rupees. * Fertiliser maker Coromandel International rose more than 6 percent after it said late on Tuesday its board approved one-for-one bonus issue of debentures worth 15 rupees each. MAIN TOP THREE BY VOLUME * Crompton Greaves on 14.57 million shares * Chambal Fertilisers on 12.69 million shares * Tata Motors on 12.15 million shares

Source: Reuters India

From a fundamental perspective would you still play contrarian in this market fall and perhaps buy some of the commodity names?

Commodity stocks tend to fall a lot and they equally tend to bounce back a lot. Commodity prices are a cyclical but overall the big super cycle in commodities which started in 1999 still continues.

Companies like Hindalco, Tata Steel, Sterlite are getting battered black and blue. This is a time to pick up these stocks and when commodity prices come back that would be the time to sell. It is the time to buy into these beaten up metal stocks. If tomorrow the rally continues you will see sharp bounce backs in these stocks.

Sterlite at 118 is used to sell at about 190-200 so if you collect these stocks during this time, you can hold on. I think there should be upside even on a trading basis.

If tomorrow the rally continues you will see sharp bounce backs in these stocks. So whatever is beaten up the most, in case it is not capex heavy or if it does not get impacted by rates then I think it is worth buying into metals at this point.

Interview excerpt: 

Ashwani Gujral, Chief Market Strategist, ashwanigujral.com in an interview with ET Now

The rupee today fell sharply by 55 paise to close at fresh two-year low of 47.81/82 against the US currency as investors rushed for the dollar as a safe haven investment amid global worries.

Renewed dollar demand from importers and some banks and weakness in equities also weighed on the rupee, dealers said. Failure in announcing a rescue for debt-ridden Greek by European finance ministers in a meeting last Friday hit the high risk assets like euro and equities, as traders went for dollar as a safe haven investment, leading to a smart rise in dollar overseas, traders said. Dollar index was up by about 0.7 per cent against its six major rivals in Europe. At the Interbank Foreign Exchange (Forex) market the domestic unit opened bearish at 47.55/56 a dollar from last close of 47.26/27.

It gradually declined further to a low of 47.8350 before ending at 47.81/82, level not seen since September 29, 2009 when it had closed at 48.10/11. “Indian equity markets traded weak throughout the day and ended down by over 1 per cent which depreciated the rupee. Fall in Euro and Dollar demand from oil importers also helped dollar to gain against rupee,” Alpari Financial Services (India) CEO Pramit Brahmbhatt said. “High risk is still evident in the global economy with a general feeling that the European politicians won’t be able to solve the debt problem fundamentally. The cancellation of a visit by Greek Prime Minister to US also added to it,” Abhishek Goenka, CEO, India Forex Advisors said. “The fall in the rupee is expected to continue and we can target 48.20 levels in near term,” he added.

Source: Money Control

The rupee slid to its lowest in nearly two years on Wednesday, as worries Europe’s debt problems may snowball into a banking crisis roiled global markets and pushed investors to the dollar’s perceived safety.

The partially convertible Indian currency weakened past 48 to the dollar, stretching a losing streak to an eighth session, and traders said the drop of 4.7 percent since the close of September 2 was likely overdone.

Dealers attributed the rupee’s fall to a level last seen in September, 2009, to strong dollar demand from importers and some banks and dollar gains against other currencies.

They said the continued slide in the equity market also put pressure on the Indian rupee.

“The slide in the rupee in the last few days has been pretty sharp and this is happening without any large scale dollar outflows,” said Ananth Narayan G., head of fixed income, currencies and commodities at Standard Chartered Bank.

“I don’t think it will sustain at 48 as exporters and real investors should come to sell.”

At 10:45 a.m., the rupee was at 47.84/85, 0.5 percent weaker than Tuesday’s close of 47.59/60. It had touched 48.02 in early deals, last reached on September 29, 2009.

Compared with the unit’s strongest level this year of 43.8550 on July 27, the rupee has shed as much as 8.7 percent.

August inflation data due around noon and its impact on the stock market will be watched, traders said.

The wholesale price index (WPI) is likely to have risen an annual 9.6 percent last month, economists polled by Reuters showed, which could pile pressure on the central bank to raise rates at its scheduled policy review on Friday.

Another Reuters poll released on Monday had forecast the Reserve Bank of India would most probably raise the repo rate, or lending rate, by 25 basis points this week.

The euro was at $1.3634, below $1.3678 at the end of the rupee trade on Tuesday, while the index of the dollar against six major currencies was at 77.286 points from 77.094 previously. For more stories on euro, see

The one-month onshore forward premium was at 16.75 points from 14 on Tuesday, the three-month was at 40.75 points form 34.50 and the one-year was at 100.25 points from 91.25.

One-month offshore non-deliverable forward contracts were quoted at 48.03, weaker than the onshore spot rate.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange were all at 47.9225. The total volume was $2.96 billion.

Source: The Economic Times

Gold demand in India, the world’s biggest buyer, was moderate on Monday after the prices in the local market rose 2 percent to a record high tracking firmness in the world market and due to a weak rupee, dealers said.

At 3:57 p.m., the October contract on the Multi Commodity Exchange was up 1.74 percent at 28,273 rupees per 10 grams, after hitting a record high of 28,355 rupees earlier in the day. The contract has risen over 20 percent since the beginning of August. “Demand was normal. People were buying despite the record high prices,” said T.K. Chandiran, managing director with Coimbatore-based KTM Jewellery.

“Though most people are buying jewellery, sales of coins and bars have also risen.”

International gold prices rose back above $1,900 an ounce on Monday as expectations grew that the United States could implement a further round of monetary easing after Friday’s weak payrolls data, while concerns over the euro zone debt crisis resurfaced.

The rupee stayed weak in afternoon trades on Monday as the dollar gained overseas with investors seeking safe-haven assets after bleak jobs data on Friday cemented view the United States might be slipping back into a recession.

The rupee plays an important role in determining the landed cost of the yellow metal, which is quoted in dollars.

India’s wedding and festival season demand will gain pace and peak in October before tapering off in December.

“Festival demand is going to slow down if prices remained above 28,000 rupees,” Chandiran said.

Source: Reuters