Rajan effect: Rupee climbs 138 paise against dollar

The rupee on Thursday strengthened by hefty 138 paise to trade at 65.69 against the dollar at the Interbank Foreign Exchange market after fresh measures by the Reserve Bank of India to stem the currency's slide.

The rupee had settled at 67.07 against the dollar on Wednesday, up by 56 paise over the previous day's close.

Traders said dollar selling by exporters and banks and fresh measures announced by new RBI Governor Raghuram Rajan to curb the rupee's slide helped domestic currency recover.

The dollar's weakness against other currencies overseas also supported the rupee's sentiment, they said.

Meanwhile, stock markets were up by over 2 per cent in early trade.

The BSE benchmark index soared by 488 points to 19,055.74, while National Stock Exchange's Nifty rose by 153 points to 5,601.90 in opening trade.

The new RBI governor on Wednesday announced measures, such as liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident deposits and dollar funds, to support the rupee.

Can Arjuna get country out of Chakravyuha?

MUMBAI: Outgoing Reserve Bank of India governor D Subbarao expressed hope that his successor Raghuram Rajan would be like Arjuna and find his way out of the Chakravyuha that the economy is in.

In 2010, Subbarao had compared the expansionary monetary policy to the Chakravyuha—a battle formation from which escape is next to impossible. He had also compared himself with Abhimnanyu the warrior who was trapped in the formation. "I wanted to hand over to my successor an economy that was stable. But now Raghuram has to be Arjuna who can get the country out of the Chakravyuha. I hope you will be able to tell your successor that I am handing over a miracle economy," said the outgoing governor while speaking at a farewell event organized by RBI.

Describing the challenges he faced while taking charge, Subbarao said that he made the transition from the finance ministry to the central bank in 24 hours. "To say that I was bewildered was an understatement. I must admit that in my early weeks I was driven more by a fear of failure than a desire for success. But that changed with the confidence of having a very strong institution behind me

The governor also came out with a "to-do" list for his post-RBI life some of which was tongue-in-cheek. "I want to study mathematics and linguistics. I have been fascinated with these two subjects—one is the language of science and the other is the science of languages. I want to learn salsa dancing. I want to travel in the country without a purpose just for the sake of travelling," said Subbarao. "I might start a tutorial class on taking baby steps or doing flip flops since I have so much experience with them," he added. "I will enjoy seeing 'Chennai Express' in the matinee show when you are all working. I am going to enjoy not having to say something profound every time I open my mouth. Most of all I will enjoy regaining my autonomy."

Bidding the governor farewell, senior-most deputy governor KC Chakrabarty said that Subbarao had left behind a legacy of establishing RBI as a knowledge institution and instilling the need for the central bank to provide accountability.

Speaking about his successor, Subbarao said that by choosing him to succeed a heavyweight such as Y V Reddy, the government had done a great favour on him. "It has done an every greater favour by appointing an intellectual like Raghuram Rajan to succeed me," said Rajan. Interestingly, both the outgoing and the new deputy governor have built a reputation in RBI for their obsession with physical fitness. While Subbarao has participated in the Mumbai Marathon and is known to jog every day. His successor Rajan, who was among the youngest in the room, is a marathon runner as well who also plays the squash and is an avid swimmer.

 

Rupee climbs 138 paise, Sensex gains over 450 points as Rajan sparks reform hopes Sensex Blue chip shares, especially banks, jumped with NSE bank index surging as much as 9.4 per cent.

MUMBAI: The rupee on Thursday strengthened by hefty 138 paise to trade at 65.69 against the dollar at the Interbank Foreign Exchange market after fresh measures by the RBI to stem the currency's slide.

The rupee had settled at 67.07 against the dollar on Wednesday, up by 56 paise over the previous day's close.

Traders said dollar selling by exporters and banks and fresh measures announced by new RBI governor Raghuram Rajan to curb the rupee's slide helped domestic currency recover.

The dollar's weakness against other currencies overseas also supported the rupee's sentiment, they said.

Meanwhile, stock markets were up by over 2 per cent in early trade.

The BSE benchmark index soared by 488 points to 19,055.74, while National Stock Exchange's Nifty rose by 153 points to 5,601.90 in opening trade.

Banking, realty, capital goods and consumer durables stocks were leading gainers.

The new RBI governor on Wednesday announced measures, such as liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds, to support the rupee.

In the Asian region, Hong Kong's Hang Seng index rose by 0.95 per cent, while Japan's Nikkei was up by 0.61 per cent in early trade.

The US Dow Jones Industrial Average ended 0.65 per cent higher on Wednesday.

Moody's says India inflation and fiscal metrics remain weaker than peers

India's inflation and fiscal metrics remain weaker than peers, Moody's Investors Service said in a presentation on Wednesday.
A higher subsidy burden and lower growth will weaken the country's fiscal metrics, analyst Atsi Sheth said in the presentation.
Economists have been worried that the annual $20 billion food subsidy programme passed by lawmakers may widen the fiscal deficit.
The agency, however, said the country's current reserves can finance the current account and external debt payment needs.
Moody's has an investment grade rating on India with a stable outlook

Sensex rises 333 points; TCS, Infosys hit record high

(Reuters) - The BSE Sensex rose over 300 points and the Nifty rose 2 percent on Wednesday on value buying in blue chip stocks after a fall of nearly 4 percent on Tuesday was seen as overdone, while IT shares surged on improving business outlook.
Shares also tracked a sharp recovery in the rupee after suspected heavy dollar selling by the RBI prevented the battered currency from slipping to a record low.
However, analysts say volatility may persist as the country faces its worst economic crunch since a balance of payments crisis two decades ago amid rising conviction that the Federal Reserve will trim its stimulus and Washington is seen moving closer to a military strike on Syria.
"It's hard to predict which way the market can go as negative newsflow continues to come at even lower levels," said Deven Choksey, managing director at K R Choksey Securities.
The broader Nifty rose 2 percent, or 106.65 points, to end at 5,448.10, closing above the psychologically important 5,400 level.
The benchmark BSE Sensex rose 1.83 percent, or 332.89 points, to end at 18,567.55.
Among recently beaten down blue chip shares, Reliance Industries Ltd (RELI.NS) gained 2.2 percent while Tata Motors Ltd (TAMO.NS) ended 4.9 percent higher.
IT shares surged on improving business outlook and rupee depreciation, dealers said.
Tata Consultancy Services Ltd (TCS.NS) ended 3.4 percent higher after earlier making its all-time high at 2,078.80 rupees while Infosys Ltd (INFY.NS) gained 2.6 percent after earlier hitting a record high of 3,139.90 rupees
Bank shares rose on hopes that the central bank may unwind its liquidity tightening measures soon now that Raghuram Rajan, a former chief economist at the International Monetary Fund (IMF), takes charge of affairs.
In a reminder of the uphill task he faces, a report on Wednesday showed that activity in India's services sector shrank in August for the second straight month for its lowest reading in four years.
ICICI Bank Ltd (ICBK.NS) rose 4.4 percent and Axis Bank Ltd (AXBK.NS) ended 2.4 percent higher.
Jet Airways (India) Ltd (JET.NS) ended 5.7 percent higher as India's cabinet approved an accord with the United Arab Emirates to nearly quadruple airline seats between the two countries over three years.
The stock has risen 12.1 percent in three consecutive session of gains following Etihad Airways' comments on Sunday that it expected its investment in the Indian carrier to be cleared by Indian authorities "imminently".
Ipca Laboratories Ltd (IPCA.NS) shares surged 7.6 percent after the company said in a statement that U.S. Food and Drug administration found its oral solid dosage formulations manufacturing facility in Pithampur 'acceptable'.
However, among decliners, real estate companies fell after the Reserve Bank of India said late on Tuesday that housing loans from banks to individuals should be closely linked to the stages of construction.
DLF Ltd (DLF.NS) fell 0.6 percent, Indiabulls Real Estate Ltd (INRL.NS) ended 0.1 percent lower.

AP govt to issue notice to HPCL over fire in Vizag refinery

Hyderabad: The Directorate of Factories of Andhra Pradesh will be seeking an explanation from the Vizag facility of the state-owned Hindustan Petroleum (HPCL), on the recent fire in the refinery-cum-petrochemical complex there, which left 24 workers dead, a senior official said today.

According to G Bala Kishore, Director of Factories, the department is investigating into the blaze following which they will issue a notice to the facility seeking an explanation for the accident.

"Notice is yet to be served. Investigation has to be completed. We are short of details. After we come to know the facts of the case, we will issue notices," Kishore told PTI, adding that they will also look into the safety measures undertaken by the facility.

"The nature of accident is intriguing. They (HPCL management) will have to give us a clarification. Based on their reply to our notice, we may seek Government permission to prosecute them," the official added.

On August 23 a massive fire broke out at the sprawling HPCL complex in Vishakhapatnam, when mostly staffers from private companies were at work.

Prima facie, a gas leak in the sea cooling water system was attributed to the fire even though probe is on into the incident.

Besides Vishakhapatnam, (East Coast) with a capacity of 8.3 Million Metric Ton Per Annum (MMTPA), HPCL operates another refinery in Mumbai (West Coast) with a capacity of 6.5 MMTPA.

HPCL currently operates two major refineries producing a wide variety of petroleum fuels and specialities.

Meanwhile the Vizag Refinery which is currently operating at 50 percent capacity after the fire mishap is expected to take some more time to scale up to full of its capacity, HPCL Executive Director VVR Narasimham said.

Mutual funds witness Rs 50,000 cr outflows in July

New Delhi: Investors pulled out a net amount of more than Rs 50,000 crore from various mutual fund schemes in July -- the highest outflow in five months.

The huge pull-out of funds during July followed a net withdrawal of Rs 48,403 crore in the preceding month, taking the total outflows for two consecutive months to close to Rs one lakh crore.

As per the latest data available with market regulator Securities and Exchange Board of India (Sebi), the net outflow of Rs 50,067 crore during July was the highest withdrawal by investors in mutual fund (MF) schemes in a single month since March, when investors had redeemed Rs 1.08 lakh crore.

This has left the MFs' net mobilisation of funds from investors so far in the current fiscal (April-July) at about Rs 45,539 crore.

Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

At gross level, mutual funds mobilised Rs 7.8 lakh crore in July, but also witnessed redemption worth Rs 8.27 lakh crore -- resulting into a net outflow of Rs 50,067 crore.

This has brought down the total assets under management of mutual funds to Rs 7.6 lakh crore as on July 31, from Rs 8.11 lakh crore in the previous month.

The BSE's benchmark Sensex plunged by 232 points, or 1.2 percent, during the period under review.

"During the financial year 2013-14 so far (April-July), mutual funds net mobilised Rs 45,539 crore as compared to Rs 1,33,976 crore mobilised in corresponding period of 2012-13," Sebi noted.

In the entire fiscal 2012-13, mutual funds had garnered Rs 76,539 crore from investors while a net amount of over Rs 22,000 crore moved out of the mutual funds' kitty during the preceding year.

PTI