Sep 27 2018

Rupee higher as Govt step to raise import duty offsets hawkish Fed policy

Financial Market Overview

27th September, 2018

Morning Coffee:-                                                                                  

MARKETS AT OPEN:-

Rupee:-

  • Indian rupee opened higher against the dollar at 72.42 after New Delhi raised import duties on non-essential items to control the current account deficit, which helps to offset a hawkish policy tilt by the U.S. Federal Reserve. Pair USDINR now at 72.48 against the previous close of 72.61.
  • Last Wednesday, India raised basic customs duty on imports of 19 items and imposed duty on aviation turbine fuel, in an effort to control the widening current account deficit and support the rupee.
  • We expect the pair to trade in the range between 72.30 to 72.65.

Indian Equities:-

  • Equity benchmarks gave up gains within the first minute of trade and were flat. The Nifty hovered around 11,050-mark, while the Sensex was trading around 36,500-mark. Investors are reacting to developments around customs duty hike that the government announced.
  • The Sensex is down 15.4 points or 0.04% at 36526.8, while the Nifty is down 10.3 points or 0.09% at 11043.5. The market breadth is negative as 377 shares advanced, against a decline of 416 shares, while 40 shares were unchanged.

Global Markets:-

  • Asian equities are trading lower today with shares in China leading the region. The Shanghai Composite is down 0.39%, the Hong Kong’s Hang Seng falls 0.34% and the Australian’s ASX200 is lower by 0.10%.
  • European markets finished higher on Wednesday with shares in France leading the region. The CAC 40 is up 0.61% while Germany’s DAX is up 0.09% and London’s FTSE 100 is up 0.05%.
  • US. stocks were lower after the close on Wednesday, as losses in the Basic Materials, Financials and Oil & Gas sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average lost 0.40%, while the S&P 500 index lost 0.33%, and the NASDAQ Composite index lost 0.21%.
  • The dollar index, after a choppy session of trade, closed less than 0.1% higher on Wednesday after the Fed dropped the reference of monetary policy being accommodative. Fed chair Jerome Powell, however, at a press conference following the interest rate decision, said that the removal did not signal a policy change. On the monetary authority’s assessment of the path of interest rates, the median dot plots signaled one more interest rate increase this year following yesterday’s widely expected quarter point increase. The Federal Open Market Committee increased the overnight funds rate to a range of 2.00% to 2.25%..
  • The Chinese yuan was almost unchanged at 6.8752 and the Korean won almost flat at 1114.2 against the dollar.
  • Sales of new U.S. single-family homes rose less than expected in August, according to data released on Wednesday. The Commerce Department said new home sales rose at a seasonally adjusted annual rate of 629,000 units last month, compared to expectations for an increase of 630,000 units. That represented an increase of 3.5% from the previous months revised total.