India Rupee Ends At 2019 Low As Yuan Slides RBI Likely Steps In

India Rupee Ends At 2019 Low As Yuan Slides RBI Likely Steps In

22 Aug 2019 05:44 PM

Financial Market Overview

22nd Aug, 2019

Evening Coffee

MARKETS AT CLOSE                                    

Indian Rupee

  • The Indian rupee fell to its lowest level against the dollar so far this year, tracking multi-year lows in the Chinese yuan. However, dollar sales by state-run banks at multiple levels, likely on the instructions of the Reserve Bank of India, helped the local unit pare some losses.
  • The rupee settled at 71.81 to a dollar, its lowest since Dec. 14, 2018, against 71.56 at previous close. The local unit opened flat, but slumped to the day’s low of 71.98, as stop losses got triggered beyond the key 71.80 mark. Depreciation in rupee was inevitable with such a fall in the yuan, but it is too soon to say if the current levels are going to be the new normal because we still have Powell’s speech tomorrow. But one thing is for sure that volatility will continue.

Indian Equities

  • The Nifty slipped below 10,750 on August 22 on growing market impatience with the promised government stimulus package.
  • At close, the Sensex was down 587.44 points at 36,472.93, while Nifty was down 177.30 points at 10,741.40. About 549 shares have advanced, 1902 shares declined, and 122 shares are unchanged. 
  • Yes Bank, Vedanta, Indiabulls Housing, Bajaj Finserv and Bajaj Finance were among major losers on the Nifty, while gainers were Britannia Industries, Dr Reddy's Laboratories, Tech Mahindra, TCS and HUL. Among sectors, except IT other indices ended lower led by the metal (down 3.5 percent), PSU Bank (down 3.7 percent), energy (down 2.3 percent), followed by auto and infra.

Global Markets

  • European markets are mixed. The DAX is higher by 0.06%, while the FTSE 100 is leading the CAC 40 lower. They are down 0.49% and 0.26% respectively.
  • Wall Street's main indexes rose on Wednesday as upbeat earnings from retailers pointed to strength in U.S. consumer demand, and held gains after minutes from last month's Federal Reserve meeting showed policymakers had debated a more aggressive interest rate cut. U.S. stocks moved solidly higher following better-than-expected results from retailers Target Corp and Lowe's Cos Inc Target shares surged 20.4% after the big-box retailer raised its annual earnings forecast. Lowe's shares climbed 10.4% after the home-improvement chain beat profit estimates. The Dow Jones Industrial Average rose 240.29 points, or 0.93%, to 26,202.73, the S&P 500 gained 23.92 points, or 0.82%, to 2,924.43 and the Nasdaq Composite added 71.65 points, or 0.90%, to 8,020.21.
  • Euro zone business growth picked up a touch in August, helped by brisk services activity and as manufacturing contracted at a slower pace, but trade war fears knocked future expectations to their weakest in over six years.IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index (PMI), seen as a good guide to economic health, climbed in August to 51.8 from 51.5 in July and above 51.2 predicted in a Reuters poll. Anything above 50 indicates growth.
  • The composite future output index measuring overall business optimism sank to 55.5, its lowest since May 2013, from 58.8 in July.
  • British retail sales plunged in August at the fastest pace since December 2008. The Confederation of British Industry's monthly gauge of retailers fell to -49 in August from -16 in July, the second weakest reading since records began in 1983 and worse than all forecasts.