Dec 01 2018

Rupee Logs Best Month In 7 Yrs

Weekly Synopsis

01st November, 2018

Markets from 26 November 2018 to 01 December 2018

Indian Rupee

The Indian rupee posted its biggest monthly rise in nearly seven years against the dollar, as more than 20% drop in crude oil prices this month renewed foreign portfolio investors’ interest in local assets. The rupee settled at 69.59 to a dollar, its highest since Aug. 10, against 69.84 previous close. The currency opened higher and traded in 69.56-69.91 band, as investors await a crucial meeting between the U.S. President Donald Trump and Chinese leader Xi Jinping at the sidelines of the G-20 Summit.

India’s April-October fiscal deficit stood at 6.49 trillion rupees ($93.23 billion), or 103.9 percent of the budgeted target for current fiscal year, government data showed on Friday. Net tax receipts in the first seven months of the fiscal year that ends in March 2019 were 6.61 trillion rupees, government data showed.

India’s foreign exchange reserves fell to $392.79 billion as of the week ended Nov. 23 from $393.58 billion in last week, according to central bank data released today. This week’s drop by $795 million in reserves was biggest since week ended on Oct. 26. The decrease was mainly due to a fall in foreign currency assets to $367.70 billion from $368.54 billion a week earlier, according to the data.

India’s economic growth slows as Modi prepares for re-election India’s economic growth fell to a worse-than-expected 7.1 percent in the July-September quarter, dragged down by a slower consumer spending and farm growth, in a setback for Prime Minister Narendra Modi who faces a national election by May. India’s growth is still faster than China’s 6.5 percent in the same quarter.

Local Markets

Indian shares inched up on Friday, with both the indexes marking their highest level in nearly two months, The broader NSE index closed 0.17 percent higher at 10,876.75, while the benchmark BSE index ended up 0.07 percent at 36,194.30. Clocking their first increase in three months, the NSE index added 4.7 percent in November, while the BSE index advanced 5.1 percent.

 

Holiday-quarter profit at Asian companies is likely to drop for the first time in more than two years, following a small rise in the July-September period, as slowing exports, falling factory output and the Sino-U.S. trade war take their toll. Profit growth in the September quarter had slipped to 2.4 percent after a 15.7 percent rise in the first two quarters of the year, on an average.

 

Local investors now await for monetary policy review at home next week and decision of key state elections due on Dec. 11. And foreign investors net bought $170.97 million of Indian shares yesterday, data from National Securities Depository showed.

Global Markets

The dollar index head its biggest monthly drop in eight months. Remarks from the Fed Chair Jerome Powell, earlier this week suggested that the U.S. central bank could slow the pace of monetary tightening next year. U.S. interest rates were “just below” neutral in an apparent shift from what he said last month.  The dollar was higher on Friday after manufacturing activity in the Chicago area rose to a four-and-a-half-year high.

Home-price gains in 20 U.S. cities grew in September at the slowest pace in almost two years, adding to signs that buyer interest is waning amid higher mortgage rates and elevated property values. The 20-city index of property values increased 5.1 percent from a year earlier.

U.S. President Donald Trump’s much-heralded meeting with Chinese counterpart Xi Jinping in Argentina on Saturday lead to an easing of the Sino-U.S. trade conflict. That has been the main question of financial and commodity markets leading up to the G20 summit in Buenos Aires. The answer is likely to steer investors at the start of the coming week.

 

The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet on Dec. 6-7 and are expected to discuss a possible production cut. Oil prices have fallen by more than 20 percent in November, to make it the biggest monthly drop in a decade.

The European Union’s statistics office Eurostat released the following data on Friday on unemployment in October in the 19 countries sharing the euro and the 28 members of the European Union. The jobless rate remained unchaged at 8.1 percent from September, against market forecasts of a drop to 8.0 percent.

GBP/USD has edged lower in the Friday session, repeating the trend seen on Thursday. Currently, the pair is trading at 1.2756, down 0.26% on the day. In economic news, it’s a quiet end to the week. British Nationwide HPI improved to 0.3%, above the estimate of 0.1%. In the U.S., Chicago PMI is expected to edge up to 58.6 points.