A Comprehensive Technical Analysis Programmes aimed to make you a Profitable Trader and achieve 100% return per annum on your Investment IN MCX & STOCK MARKET SPECIALLY IN GOLD MARKETThe Reserve Bank of India (RBI) chief said on Tuesday that countries that allowed exchange rates to be determined by Markets could not then use the currency as a policy tool to fight inflation.
"If the exchange rate is to be market-determined, you cannot use it as an instrument for some policy or the other," RBI Governor Y.V. Reddy said at a seminar.
Reddy was responding to a question on why many countries were not using currency appreciation to rein in inflation.
Foreign Direct Investment into India has surged to over USD 25 billion in 2007-08 and the country’s Foreign Exchange Reserve crossed USD 341 billion as of today, Ashwani Kumar, Minister of State for Commerce and Industry has said.
Addressing the two-day India Investors’ Summit organised by Financial News in association with Dow Jones and The Wall Street Journal in London, Ashwani Kumar highlighted the initiatives of the UPA government in making growth more inclusive and the emphasis laid on education and health in the context of providing skills and better quality of life.
He said the next wave would be in the skill-based manufacturing sector.
Nearly 500 delegates from business and industry registered for the event which discussed the current social, financial and economic dynamics of doing business with India.
Ashwani Kumar gave a background to the reform process in India and the key drivers of India’s growth.
To support his argument of the sustainability of GDP growth of over 8 per cent in the long run, he observed that India had the advantage of a huge young workforce (24 per cent of the population are below the age of 28 years, 54 per cent of the population are in the working group) and a very high savings and investment rate (over 35 per cent of GDP).
Domestic demand and investment are the key drivers of growth and therefore insulate the Indian Economy to a large extent from the sub-prime crisis.
Inflation, though a major concern, could be contained. The growth potential of services sector in India was enormous at USD 200 billion offering employment to 40 million people, he said.
Kumar was positive about sustainability of India’s growth saying no reform measure had been reversed even though six different government had been in office after the reform process began.
Lord Mayor of the City of London, David Lewis, who had visited India recently, was very optimistic about the growth prospects of India but felt that liberalisation of the Indian financial and legal services sectors could have been faster.
The High Commissioner of India to the UK Shiv Shanker Mukherjee and the UK minister of State for Trade and Investment, Lord Digby Jones, also addressed the gathering. The summit concluded on Tuesday.
Crude oil rose above $129 a barrel in New York for the first time after billionaire hedge-fund manager Boone Pickens said that oil will reach $150 a barrel this year.
Prices will climb because supply isn’t keeping up with demand, Pickens, the founder and chairman of Dallas-based BP Capital LLC, told CNBC today. Oil advanced on May 16 when Goldman Sachs Group Inc. boosted its estimate for the second half of the year to $141 a barrel, from $107, citing supply constraints.
``There is so much momentum in the market that it doesn’t take much for prices to reach new records,’’ said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``We rose today after Boone Pickens basically parroted the Goldman line on prices.’’
Crude oil for June delivery rose $1.82, or 1.4 percent, to $128.87 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Futures reached $129.31, the highest since trading began in 1983. Prices are 98 percent higher than a year ago.
Credit Suisse Group AG and Societe Generale SA raised their oil prices forecasts for 2008 and 2009 in reports today, citing investor flows and supply limitations.
Brent crude oil for July settlement rose $2.05, or 1.6 percent, to $127.11 a barrel on London’s ICE Futures Europe exchange. The contract touched a record $127.49 today.
Oil prices also rose because the dollar weakened against the euro, prompting investors to buy commodities as a hedge against the currency’s decline. The euro gained after an adviser to the German government said European policy makers may increase interest rates as soon as the financial crisis ends.
German consumer prices rose 2.6 percent in April from a year earlier after jumping 3.3 percent the previous month, the most in 12 years. German producer-price inflation accelerated to 5.2 percent in April, the fastest in almost two years, the Federal Statistics Office said today. The European Central Bank aims to keep inflation in the euro region just below 2 percent.
``Oil is up because the dollar is being pounded on the bigger-than-expected increase in German inflation,’’ said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``The likelihood that the ECB will cut rates to be more in line with those in the U.S. is reduced by the German inflation numbers.’’
Agum Gupta, Head Forex, Standard Chartered Bank, believes that if crude goes above USD 130 per barrel, then sentiments will immediately take a beating and the market will run towards Rs 43 per dollar. On the other hand, he feels that if there are steady capital inflows into the country, then sentiments can change and a slightly stronger rupee in the short-term can be expected.
Excerpts from CNBC-TV18’s exclusive interview with Agum Gupta:
Q: Do you think that this Rs 42.80 resistance for the rupee will hold and should we quite firmly not cross the Rs 43 mark at least in the next couple of weeks?
A: The resistance is more like at Rs 42.93 or Rs 42.95, that’s where we traded up to on Friday. Rs 42.80 is no longer a resistance level. We expect Rs 43 to hold this week.
Q: What can turn the tide, would you say that any adverse news, for instance oil going up by a couple of dollars, can turn the table or balance completely?
A: If oil goes at about USD 130 per barrel, then definitely sentiments will immediately take a beating and the market will run towards Rs 43.
Q: What can turn the balance in favor of the rupee?
A: Capital inflows. If we start seeing some steady capital inflows in the country, then the sentiments will slightly change and we will be again looking at a slightly stronger rupee in the short-term.
Q: What’s the advice for an importer and exporter at this juncture?
A: At the moment, we look to be in this new range of Rs 42.45-42.95. So, exporters can sell close to Rs 43 and importers should buy on dips close to Rs 42.5. So, we are trading in a short-term range at the moment.
Source : MoneyControl
Nifty Outlook for coming days
The Nifty is likely to consolidate between the range of 5000 to 5200 levels in coming trading session.Market is waiting for trendline breakout.On the higher side it may face resistance around 5200.Once it breaks upperside trendline next target 5400.On the lower side it may face resistance around 5000.Once it breaks lowerside trendline next target 4800.On the downside 4800-4700levels is an immediate support
India’s rupee fell on speculation crude oil near a record high will increase demand for dollars needed to pay for the commodity.
The local currency extended a four-week decline as companies including Indian Oil Corp., the nation’s biggest refiner, stepped up dollar purchases after oil became costlier by almost 33 percent this year. Energy costs may also widen the nation’s current-account deficit as Asia’s third-largest economy ships in three-quarters of the oil it needs from overseas.
``Importers are more aggressive in buying dollars due to the rapid increase in oil,’’ said Indrajit Sengupta, a currency trader at state-owned Canara Bank in Mumbai. ``Since there is no matching dollar supply, the rupee will be under pressure in the near term.’’
The rupee declined 0.2 percent to 42.595 per dollar at the 5 p.m. close in Mumbai, from 42.5125 on May 16, according to data compiled by Bloomberg. Markets were closed yesterday for a holiday.
The value of oil imports in the 12 months through March climbed 23.5 percent to $71.8 billion from a year earlier, helping widen the trade deficit to $80.4 billion. The current- account shortfall widened to $5.4 billion in the three months ended Dec. 31 from $3.7 billion a year earlier and $4.7 billion in the preceding quarter, the central bank said on March 31.
Exporters Purchase
Crude oil traded above $127 a barrel in after-hours trading on the New York Mercantile Exchange after touching an all-time high of $127.82 on May 16.
The local currency pared losses on speculation exporters purchased the currency as it traded near a 13-month low. A weaker currency increases the income of exporters when they repatriate their earnings.
``The dollar was finding it difficult to rise beyond a point which probably prompted exporters to sell,’’ said V. Rajagopal, chief currency trader at Kotak Mahindra Bank Ltd. in Mumbai. ``That helped the rupee recover some ground.’’
The local currency fell 2.3 percent in the week through May 9, the most since 1998, and extended its decline by 2.2 percent last week, Bloomberg data show.
The Indian rupee trimmed early losses on Tuesday after a sharp slide to 13-month lows last week was seen by some investors as overdone, but the outlook remained bearish because of high oil prices.
The partially convertible rupee ended at 42.635/640 per dollar, 0.23 percent weaker than Friday’s close of 42.53/54. Markets were closed on Monday for a holiday.
The rupee hit a low of 42.92 on Friday, its weakest since mid-April 2007.
"The dollar/rupee buying by oil refiners was not sustained and some selling at higher levels by exporters and banks pushed it down," said V. Rajagopal, head of currency trading at Mumbai-based Kotak Mahindra Bank.
Oil CLc1, India’s biggest import, has surged to record highs near $128 a barrel, raising the risk of the trade deficit widening. India imports more than two-thirds of its oil needs, and crude refiners are the biggest buyers of dollars.
Standard Chartered said it expected the rupee to remain weak due to slowing growth and widening trade deficit, while Goldman Sachs sees next support at 43.82. A Reuters poll showed investors have increased their short positions in the rupee and other Asian currencies.
The rupee has lost 5 percent against the dollar this month and nearly 8 percent this year, weighed down by signs of slowing growth, high oil prices and 3-1/2-year inflation Foreigners have been buyers of about $70 million of Indian stocks in May, but they have sold a net $2.7 billion so far in 2008.
Reserve Bank of India Governor Yaga Venugopal Reddy said in Singapore that countries that allowed exchange rates to be determined by markets could not then use the currency as a policy tool to fight inflation.
"If the exchange rate is to be market-determined, you cannot use it as an instrument for some policy or the other," he said.
