Jan 25 2019

Rupee Steady As Oil Offsets FPI Outflow Impact

Weekly Synopsis

Date:- 25th January 2019

 Markets from 21st January 2019 to 25th January 2019

 Indian Rupee

The Indian rupee was little changed this week against the dollar as lower crude oil prices offset the impact of foreign fund outflows from local bonds, while the country’s fiscal position stayed in focus ahead of the federal budget.The rupee, settled lower at 71.18 to a dollar, against 71.07 previous close. The currency opened higher at 71.00 and briefly rose to the day’s high of 70.95 before falling to 71.24. It trades in a weekly range between 71.5250 to 70.9500 against the US Dollar.

Foreign investors were net sellers of $227.48 million of local debt this week until yesterday, data from National Securities Depository Ltd. showed. These investors sold net local shares worth $27.31 million yesterday but were net buyers of $4.71 million worth of local shares until yesterday this week.

India’s aims to narrow the fiscal deficit to 3.3% of gross domestic product this fiscal year and to 3.1% next year. The interim budget is due on Feb. 1.

Global Market

The dollar index was trading 0.3% lower. It surged 0.5% rising to three-week highs yesterday, tracking a slump in the euro. The euro slipped as European Central Bank’s President Mario Draghi said economic risks had moved to the downside and data in near-term was expected to be weaker than previously anticipated. It was last trading 0.3% higher at 1.1340 after shedding 0.7% yesterday.

The number of people who filed for unemployment assistance in the U.S. fell to the lowest level since 1969 last week. The U.S. Department of Labor said that the number of individuals applying for initial jobless benefits in the seven days ended Jan. 19 decreased by 13,000 to a seasonally adjusted 199,000.

U.S. home sales tumbled to their lowest level in three years in December and house price increases slowed sharply, suggesting a further loss of momentum in the housing market. Home sales falling 1.0 percent to a rate of 5.25 million units in December. Existing home sales, which make up about 90 percent of U.S. home sales, plunged 10.3 percent from a year ago.

German manufacturing activity contracted at the fastest pace in over four years in January. German manufacturing PMI slumped to 49.9, the lowest in 50 months, from a final reading of 51.5 in December. The services PMI improved to 53.1 this month, up from 51.8. That was above expectations for a reading of 52.2.

The European Central Bank left interest rates on hold as expected Thursday, as a sharp slowdown in euro area growth fueled expectations that any policy normalization could be delayed. Last month, the ECB ended its four-year long €2.6 trillion ($2.96 trillion) bond purchase plan and reiterated that interest rates are likely to remain on hold at least through the end of summer.

Euro zone consumer confidence rose in January from a sharply revised December number, figures released on Wednesday showed. The European Commission said a flash estimate showed euro zone consumer morale rose to -7.9 this month from -8.3 in December.

German economic sentiment improved unexpectedly in January, but an index of current conditions tumbled to a four-year low, underlining concerns over the health of the euro zone’s largest economy. Current Conditions Index dropped to 27.6 from 45.3, much worse than expectations for a reading of 43.5.

U.K. jobs report released Tuesday strengthened the case a gradual tightening of monetary policy by the Bank of England, as both employment and earnings growth came in a little above expectations. The unemployment rate fell to 4.0% in November, beating expectations for it to hold steady at 4.1%.

Weakness in the service and farm sectors slowed China’s economic growth in the fourth quarter, despite a strong pickup in construction activity, official data showed on Tuesday. Services grew 7.4 percent from a year earlier, slowing from 7.9 percent in the third quarter, while growth in agriculture slowed to 3.5 percent from 3.6 percent.

The services sectors that account for the biggest chunk of China’s expansion slowed more sharply than the overall economy last quarter. Growth in the retail and wholesale sectors slowed to 5.5 percent in the fourth quarter of 2018 from a year earlier, down from 7.2 percent at the end of 2017. Real-estate growth slid to 2 percent in the quarter.

British households’ hopes for their finances over the year ahead remain near a five-year low, due to growing concern about job security ahead of Brexit, though easing inflation pressures have offered some short-term cheer. IHS Markit said its monthly Household Finances Index picked up to a three-month high in January.

China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown. Fourth-quarter gross domestic product (GDP) grew at the slowest pace since the global financial crisis, easing to 6.4 percent.

Local Market

Indian indices erased all its morning gains and ended lower on Friday with Nifty finished below 10,800 level. At the close, the Sensex was down 169.56 points at 36,025.54.

Nifty was down 69.30 points at 10, 780.50. About 692 shares have advanced, 1829 shares declined, and 150 shares are unchanged. Bharti Infratel, HCL Tech, Bharti Airtel, Cipla and Yes Bank were the top gainers on the Nifty, while Zee Entertainment, Maruti Suzuki, UltraTech Cement, Hero Motocorp and Indiabulls Housing were the top losers on the Nifty.