India Rupee At 6-Month Low On Custodian Outflows

India Rupee At 6-Month Low On Custodian Outflows

19 Aug 2019 05:33 PM

Financial Market Overview

19th Aug, 2019

Evening Coffee

MARKETS AT CLOSE                                    

Indian Rupee

  • The Indian rupee fell to an over six-month low against the dollar on likely custodian outflows and as local shares retreated, erasing most of its early gains. The rupee settled at 71.43 to a dollar, its lowest since Feb. 7, against 71.15 at previous close.
  • The local unit opened at 71.17 and briefly rose to the day's high of 71.05 before sliding to 71.47 in late trade on dollar purchases by foreign and private banks ahead of rupee’s daily reference rate fixing.
  • Despite today’s uptick, chances of fall in the pair are more as “risk-on” sentiment has returned to the market, while hopes of some fiscal stimulus by our government is most likely to be favorable for the local unit. The pair may fall towards 70.80-71.10 as long as it holds below 71.50 this week.

Indian Equities

  • The Indian markets started the week on a flat note. Led by positive global cues, the Nifty index opened in the green and later touched highs of 11,147. However, in the last hour of trade, the index erased almost all the gains before closing flat at 11,054 (up 0.1%).
  • Amongst the broader market indices, BSE Midcap and Smallcap ended higher by 0.2% and 0.5% respectively. Most of the sectoral indices traded with a positive bias. Capital Goods and Consumer Durables were the top gainers in the range of 1.2%-1.6%, while Oil & Gas and Metals were the major losers.
  • While there are no key domestic triggers in the near-term, focus will now be on economic recovery and any stimulus/measures from the Indian government may boost sentiments.

Global Markets

  • European markets are sharply higher today with shares in Germany leading the region. The DAX is up 1.46% while London's FTSE 100 is up 1.14% and France's CAC 40 is up 1.07%.
  • U.S. stock index futures rose about 1% on Monday as signs of an interest rate reform in China bolstered hopes that major economies would act to stave off the slowing economic effects of escalating global trade tensions. The latest stimulus for the world's second-largest economy follows news of potential German economic easing on Friday, which helped Wall Street's major indexes end the session more than 1% higher. The indexes racked up their third straight weekly loss on Friday and the S&P 500 is now about 5% away from a record high hit in July. However, traders will be split on direction for the next few weeks as they balance trade risks and signs of slowing growth with the potential for more action from the U.S. Federal Reserve and others in September.
  • British working-age households are growing more cautious about making major purchases amid concerns about Brexit and a possible recession, a monthly consumer survey showed on Monday. The IHS Markit Household Finance Index dropped to a three-month low of 43.7 in August from 44.3 in July, and households' appetite to make major purchases fell at the second-fastest rate since September 2017.
  • Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Euro-area inflation was weaker than initially reported in July, raising pressure on European Central Bank policy makers to consider more stimulus in September. Eurostat revised its July estimate for consumer price growth to 1%, down from a reading of 1.1% reported on July 31. It’s the second consecutive revision to inflation data.