The dramatic fall of the rupee in the past few days appears to have taken a respite and closed higher today at around 57.8 to the $ against yesterday's close at 58.4 and an intraday low of 58.98 (an all time low ). This is due to an unexpected upgrade of India's rating by International rating agency Fitch. India's rating is now back to 'Stable' from 'Negative'. Govt should now be able to breathy easy and continue with its efforts to
contain deficit, inflation etc, push for reforms, attract foreign investment, improve infrastructure.and put in place necessary catalyst for.growth. The present upgrade is the result of Govt's actions in the light of Fitch's earlier warning that it would downgrade India unless the country addresses its economic issues. Therefore if the necessary follow through on Govt's action does not take place , we may see a downgrade to junk. And if Standard&Poor's outlook on India is anything to go by, it still maintains a negative rating. Doubts therefore persist. Govt therefore cannot afford any lackadaisical approach and needs to cash in quickly on the improved sentiment. It has nothing to loose but everything to gain with elections due next year.
So far as the rupee is concerned, while currencies of emerging markets have also borne the brunt of depreciating values, India might have underperformed a bit. But this could be because it had appreciated quickly earlier. Looks like we may have formed a bottom for now.
IIP figures for April released today continues to paint a weak picture for the economy. 2% growth compared to last year. Capital goods index a dismal 1%. Not a happy situation.
Not surprisingly FIIs have been selling. They have been selling index futures, obviously to hedge their investments. They have been selling in the debt market.They have been selling stocks also. Markets are therefore at the level where it should be under the circumstances. With a depreciated rupee marketmen are not hopeful of a rate cut soon. And with that hopes of highly leveraged mid sized companies getting a hold are also gone for the time being. This is further aggravated with inflation not being kind either. In any case there isn't much downside left and we may be near a bottom.. .
More in my next and until then
Happy investing
Basudev
contain deficit, inflation etc, push for reforms, attract foreign investment, improve infrastructure.and put in place necessary catalyst for.growth. The present upgrade is the result of Govt's actions in the light of Fitch's earlier warning that it would downgrade India unless the country addresses its economic issues. Therefore if the necessary follow through on Govt's action does not take place , we may see a downgrade to junk. And if Standard&Poor's outlook on India is anything to go by, it still maintains a negative rating. Doubts therefore persist. Govt therefore cannot afford any lackadaisical approach and needs to cash in quickly on the improved sentiment. It has nothing to loose but everything to gain with elections due next year.
So far as the rupee is concerned, while currencies of emerging markets have also borne the brunt of depreciating values, India might have underperformed a bit. But this could be because it had appreciated quickly earlier. Looks like we may have formed a bottom for now.
IIP figures for April released today continues to paint a weak picture for the economy. 2% growth compared to last year. Capital goods index a dismal 1%. Not a happy situation.
Not surprisingly FIIs have been selling. They have been selling index futures, obviously to hedge their investments. They have been selling in the debt market.They have been selling stocks also. Markets are therefore at the level where it should be under the circumstances. With a depreciated rupee marketmen are not hopeful of a rate cut soon. And with that hopes of highly leveraged mid sized companies getting a hold are also gone for the time being. This is further aggravated with inflation not being kind either. In any case there isn't much downside left and we may be near a bottom.. .
More in my next and until then
Happy investing
Basudev
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