Falling rupee spoils exporters’ dollar play

The falling rupee has now caught exporters on the wrong foot. Corporates, which took pre-shipment dollar loans a month ago and converted them into rupee funds, are now finding themselves in a fix. While they were delighted at having to pay lower interest rates on the dollar loans, they would now have to shell out more rupees to buy dollars at the time of repayment.

Sample this. An exporter took a three-month pre-shipment loan in dollar terms a month ago, when the rupee was trading at 39.50 levels. Now, the rupee has slipped to 41.50 levels, and almost touched 42 levels versus the greenback. This implies that when the exporter has to repay the loan, he will have to buy dollars at 41.5-42 levels against his borrowing rate of 39.50 levels.

A senior foreign exchange strategist with a multinational bank said, “To tide over such a crisis, most exporters are now choosing to either cut their positions by selling off their dollar-holdings as stop-loss triggers have been reached.” The other option considered, he said, is to roll over these dollar-denominated loans. However, considering the fact that access to foreign currency loans has become extremely difficult, especially after the subprime crisis, banks are not willing to roll over these loan contracts. Bankers see the rupee trading at 41.5-42 levels in the near- to medium-term, but are bullish over the long-term, given that the India story is still intact overseas.

Another treasury manager at a foreign bank pointed out that exporters, who took pre-shipment dollar credit from banks a few months ago and converted it into a post-shipment loan, would also be losing a lot, because they would have had no access to the forward route. Treasury managers say the three main factors contributing to a weaker rupee are: muted capital inflows, current account deterioration and sidelined exporters. The rupee has, in fact, slipped by over 4.5% since the end of April.

This has been largely on account of heavy dollar purchase by oil companies, given that crude oil prices have crossed the $126-mark per barrel. RBI, too, has abstained from intervening in the foreign exchange market ever since the rupee began to weaken versus the dollar. Tracking the weaker rupee, the premia payable on forward contracts, especially the near-term contracts, have risen sharply over the past few days. Treasury managers believe that premia on forward contracts would come down only when the US Federal Reserve takes a pause in its rate actions.

Rupee falls as oil prices rise, stocks eyed

Rupee softened on Monday as record high oil prices intensified concerns about a widening trade deficit and a weakening stock market raised worries that foreigners may withdraw some capital.

At 9:02 am the partially convertible rupee was at 41.65/66 per dollar, compared to 41.60/61 per dollar on Friday. It lost 2.3 per cent on the week.

Oil has hit record highs above $126 a barrel. India imports 70 percent of its oil and refiners are among the biggest buyers of dollars in the local market.

The trade deficit had widened 35.5 per cent to $80.4 billion in the fiscal year ended March, largely due to soaring oil prices.

The Indian stock market fell 4.9 per cent last week. So far in 2008, foreigners have been net sellers of $2.9 billion of stocks.

The Stock market is still looking weak

The market is still looking weak. Sensex is at 16,592, down 144 points from the previous close. Nifty is at 4930, down 51 points. CNX Midcap index is down 2.6% and BSE Smallcap index, down 2.7%. All sectoral indices are trading lower, with that of realty, metal and capital goods being beaten up the most. Market breadth is also extremely weak, with just 119 advances against 1,065 declines on the NSE

Deutsche Bank has cut its target price for ICICI Bank by 26% to Rs 1,300, reports NDTV Profit. The stock is currently trading at Rs 864.95, down over 1% on the BSE.

RPL has a strong support zone between Rs 140 and Rs 170, says Simi Bhaumik, techncial analyst, on NDTV Profit. One can look at buying the stock on dips or even at current levels for the long term, keeping stoploss below Rs 140, she suggests. It has a target price of over Rs 210, she says

A good level to buy Essar Oil can be Rs 232-233, says Sandeep Wagle, chief technical analyst, Angel Broking, on NDTV Profit. Long term charts look bullish, he adds. The stock is currently trading at Rs 243, down 5.5% on the BSE.

TTML has resistance at Rs 38-39, but once Rs 40 is crossed, it can go up to Rs 48-50, says Sandeep Wagle, chief technical analyst, Angel Broking, on NDTV Profit. The stock is currently trading at Rs 34.55, up 1.6% on the BSE

DCB seems to have support at Rs 75 for now, says MB Singh, technical analyst, on Zee Business. One should look to exit the counter on rallies, close to Rs 105-107, he suggests. The stock is currently trading at Rs 88.35, down 4.6% on the BSE

Mkts plummet: Midcap, Small cap down over 2.5%

The markets tumbled due to weakness across the sectors especially in realty, metal, oil, capital goods, power and banking stocks. Midcap and small cap stocks have hugely impacted. Market breadth is weak, nearly 1:10. On the global front, Asian markets were trading mixed.

At 10:53 am, the Sensex was down 148 points at 16,588 and the Nifty down 50 points at 4,932. About 663 shares have advanced, 2256 shares declined, and 168 shares are unchanged.

JP Associates, Reliance Infra, Grasim, Reliance Petro and Siemens were top losing counters while Satyam, HDFC, Ranbaxy Labs and Nalco were gainers.

Aishwarya Telecom, Reliance Petro, Reliance Capital and Reliance were most active shares on the exchanges.

Mkts slip further: Realty, oil, metal, midcaps hammer

The market continued its weakness due to selling pressure seen in realty, metal, oil, power, capital goods, banking, pharma and FMCG stocks. Market breadth is weak; only 120 shares advanced while 926 shares declined on the NSE. Midcap and small cap stocks are down. On the gloabal front, Asian markets are still trading mixed.

At 10:19 am, the Sensex was down 150 points at 16,586 and the Nifty down 53 points at 4,929.

Top losers were JP Associates, Reliance Infra, Hindalco, ACC, Reliance Petro and SAIL while gainers - Satyam, Nalco, HCL Tech, TCS, Infosys and Wipro.

Midcap and small caps stocks have hammered a lot, respective indices down over 2.7% each. Bharat Bijlee, GVK Power, IVR Prime, Arshiya Intl, UCO Bank, Bajaj Hind and Motilal Oswal were down 5-8%.

Realty stocks have underperformed the markets, BSE Realty Index was down 3.6% due to selling in DLF, Puravankara Proj, HDIL, Unitech and Indiabulls Real Estate.

Metal stocks also tanked, BSE Metal down 2.7% as Jindal Steel, SAIL, Tata Steel, Hindalco and Hindustan Zinc.

BSE Capital Goods, Power, Bankex and Healthcare were down over 1% each.

However, technology stocks outperformed, IT Index up 0.7%. TCS, Infosys, Satyam, Wipro and HCL Tech were the movers.

Markets open weak; metal, FMCG, banks down

The markets have opened weak following negative global cues and selling pressure in metal and banking space. Midcap and small cap stocks are in red. Market breadth is negative, nearly 167 shares advanced while 719 shares declined.

At 9:56 am, the Sensex was down 97 points at 16639 and the Nifty down 33 points at 4949.

Bharti, Infosys, Reliance Energy, JP Associates, NTPC, Hindalco, SAIL, Tata Steel, HDFC Bank and SBI were losers while gainers - Satyam and ONGC.

Metal stocks were the major losers today as government notifies 15% export duty on pig iron, CR products. SAIL, JSW Steel, Tata Steel and Hindalco were witnessing selling pressure.

Asian markets were trading mixed. Shanghai Composite was down 0.55%, Hang Seng down 1.52%, Jakarata Composite down 0.58% and Seoul Composite down 1.31% while Nikkei 225 Average rose 0.43%, Straits Times up 0.24% and Taiwan Weighted up 0.28%.

US markets fell sending the markets to its first weekly drop in a month as AIG reported huge losses and going to raise money, crude oil surged to a new high. The Dow Jones ended 120.90 points lower at 12745.88 and the Nasdaq shut shop at 2445.52 down 5.72 points.

Market cues:
FIIs net sell USD 99.8 m in equity on May 8
MFs net sell Rs 83.4 cr in equity on May 8
NSE F&O Open Interest unchanged at Rs 69,992 cr

F&O cues:
Futures Open Interest down Rs 1,204 cr
Options Open Interest up Rs 1,200 cr
Nifty Futures add 6.2 lakh shares in OI; at 8-pt premium
Nifty Open Interest PCR at 1.37 Vs 1.38
Nifty Puts add 10.3 lakh shares in Open Interest
Nifty Calls add 9.1 lakh shares in Open Interest
Nifty December 5000 Put adds 2 lakh shares in Open Interest
Nifty May 5000 Put adds 2 lakh shares in Open Interest
Nifty 5100 Put sheds 1.49 lakh shares in Open Interest
Nifty 5100 Call adds 3.7 lakh shares in Open Interest
Nifty 5000 Call adds 3.5 lakh shares in Open Interest
Stock Futures shed 2.5 cr shares in Open Interest

Source : moneycontrol.com

Equities open lower on weak global cues

Tracking global Markets, the Bombay Stock Exchange benchmark Sensex on Monday fell by over 136 points in early trade on selling by funds.

The 30-share index, which had lost 343.58 points in the previous session, fell further by 136.13 points to 16,600.94 in the first five minutes of trade.

Similarly, the wide-based National Stock Exchange index Nifty was down by 58.15 points to 4,924.45.

Marketmen said weakening trends in the global Markets mainly dampened the trading sentiments here, triggering selling by funds.

Major losers were Larsen and Toubro, ICICI Bank, Reliance Energy, State Bank of India, Tata Steel, Reliance Industries, Reliance Petroleum, Grasim and ITC Ltd.

Asian Paints, Bharat Heavy, Bharti Airtel: India Equity Preview

The following stocks may rise or fall in Mumbai today. Prices refer to the close from May 9. The preview includes news that broke after the markets shut. Stock symbols are in brackets after company names.

The Bombay Stock Exchange’s Sensitive Index, or Sensex fell 2 percent to 16,737.07. The S&P CNX Nifty Index on the National Stock Exchange declined 2 percent to 4,982.60.

Overseas investors sold a net 4.03 billion rupees ($99.8 million) of Indian shares on May 8, according to the nation’s stock market regulator.

Asian Paints Ltd. (APNT IN): India’s largest paint maker’s fourth-quarter profit rose 42 percent to 945.2 million rupees, the company said in a statement to the Bombay stock exchange on May 9. Asian Paints dropped 11.3 rupees, or 0.9 percent, to 1,222.50.

Bharat Heavy Electricals Ltd. (BHEL IN): India’s biggest power-equipment maker will spend 2.4 billion rupees over three years on its newly acquired company Bharat Heavy Plate & Vessels Ltd., the Business Standard reported yesterday, citing the company. Bharat Heavy fell 36.70 rupees, or 2.1 percent, to 1,724.80.

Bharti Airtel Ltd. (BHARTI IN): The Indian mobile-phone operator which is in talks to buy a stake in South Africa’s MTN Group Ltd. may make a bid of 175 rand a share, up from the 160 rand to 165 rand it was considering previously, Dow Jones Newswires reported, citing a person familiar with the situation. Bharti added 12.6 rupees, or 1.5 percent, to 841.80.

ICICI Bank Ltd. (ICICIBC IN): India’s second-biggest bank by assets had its stock price estimate cut by 26 percent to 1,300 rupees a share at Deutsche Bank AG. ICICI fell 19 rupees, or 2.1 percent, to 873.85.

Mahindra & Mahindra Ltd. (MM IN): India’s biggest maker of sports-utility vehicles will raise the prices of its vehicles by as much as 2.5 percent starting May 19 because of an increase in input costs, the company said in a statement on May 9. Mahindra declined 6 rupees, or 0.9 percent, to 672.85.

Novartis India Ltd. (HCBA IN): The Indian unit of Switzerland’s Novartis AG said fiscal fourth-quarter profit fell 9.8 percent to 215.3 million rupees from the year-earlier period, the company said on May 9 in a statement to the Bombay stock exchange. Novartis India slid 6.9 rupees, or 2.2 percent, to 307.30.

State Bank of India (SBIN IN): The nation’s biggest bank by assets will add 1,000 branches in villages and semi-urban areas in the year ending March 31, the Hindu Business Line reported yesterday, citing an executive at the bank it didn’t name. State Bank fell 51.2 rupees, or 3 percent, to 1,682.10.

Source : Bloomberg