India Rupee Snaps 2-Day Fall On Custodian Dollar Inflows

India Rupee Snaps 2-Day Fall On Custodian Dollar Inflows

16 Oct 2019 05:33 PM

Financial Market Overview

Indian Rupee

  • The Indian rupee ended higher against the dollar for the first time in three sessions, on custodian greenback inflows that eroded an early decline due to a slump in the Chinese yuan. The rupee ended at 71.44 to a dollar against 71.54 at previous close. It earlier fell to a one-month low of 71.72 before rising to the day’s high of 71.36 on dollar sales by state-run lenders and foreign banks.
  • A reversal in the rupee’s direction was largely led by large corporate inflows and some foreign inflows in the equity market. Dollar sales by RBI also helped. Going forward, we think that there is no appetite in the market to go short on the rupee considering that the RBI is actively on dollar sales, and the rupee will largely trade in the 71.00-72.00 range in the near term.

Indian Equities

  • Indian shares ended higher on Wednesday as investors looked forward to upbeat September-quarter earnings from companies in the backdrop of the government's corporate tax cut last month.
  • The September-quarter earnings season has so far seen blue-chip companies such as Hindustan Unilever (HUL) Wipro Ltd and ACC Ltd beat estimates. Earnings were in-part helped by the government's move to slash corporate taxes last month. The broader NSE index ended 0.31% higher at 11,464, while the benchmark BSE index finished up 0.24% at 38598.99.

Global Markets

  • European markets are mixed. The DAX is higher by 0.23%, while the FTSE 100 is leading the CAC 40 lower. They are down 0.15% and 0.08% respectively.
  • Wall Street advanced on Tuesday as third-quarter reporting season hit with a spate of upbeat earnings reports that brought buyers back to the equities market. All three major U.S. stock averages gained ground in a broad-based rally, with the S&P 500 and the Nasdaq hitting their highest closing level in more than three weeks. The Dow Jones Industrial Average rose 237.44 points, or 0.89%, to 27,024.8, the S&P 500 gained 29.53 points, or 1.00%, to 2,995.68 and the Nasdaq Composite added 100.06 points, or 1.24%, to 8,148.71.
  • The inflation outlook among U.S. consumers remained muted in September, rising slightly over the near term but falling to the lowest level on record over a three-year time frame since the New York Federal Reserve began its monthly survey of consumer expectations in 2013. The latest survey results, released on Tuesday, showed a boost in confidence about the state of the job market. At the median, consumers expected earnings growth over the next year would be 2.5%, up from 2.3% in the August survey of 1,300 households. The perceived risk of losing a job over the next year fell to 13.4%, from 14.2%.
  • Euro zone inflation dropped to its slowest pace in nearly three years in September, more than previously estimated, the European Union statistics agency said on Wednesday. The drop is likely to raise new concerns on the state of the euro zone economy and may reignite a debate within the European Central Bank on how to pursue its goal of keeping inflation close to but below 2% over the medium term. Eurostat said prices in the 19-country euro zone rose 0.8% on the year, down from its earlier estimate of 0.9% and lower than the market consensus of 0.9%.