Rupee ends at 63.5, snaps five days of gains

The rupee fell on Thursday, ending five days of gains, as state-run banks likely bought dollars to meet defence needs of the government and as investors booked profit in shares.
Dealers cited RBI intervention to support the rupee as it approached 64 to the dollar.
The rupee has been on a recovery trail helped by recent steps like the passage of the pension bill in parliament and the central bank providing a concessional swap facility to banks to attract overseas deposits from non-resident Indians, which by some estimates can net around $10 billion, helping ease some of the recent despondency about policy making in India.
Foreign buying in Indian equities has continued to remain strong, now adding up to nearly $900 million in five sessions, including provisional data for Wednesday.
Analysts, however, are cautious to already call a turn in fortunes for the rupee.
"We'd be hesitant to say that this denotes a serious sentiment shift for India, and more likely an opportunistic short-term dynamic reflecting buying at (short term) technically oversold levels in EM equities," said Sacha Tihanyi, senior currency strategist at Scotiabank.
The rupee ended at 63.50/51 to the dollar versus 63.38/39 last close. It rose to 62.92 in the session, its strongest level since August 19.
After favourable trade data, that showed the trade deficit narrowed most in five months, economists awaiting July factory and August retail inflation data later on Thursday to provide cues ahead of the central bank's policy meeting next week. Wholesale inflation data is due on Monday.
India's factory output likely shrank for the third straight month in July, while wholesale inflation likely edged up to a six-month high in August.
In the offshore non-deliverable forwards, the one-month contract was at 64.29 while the three-month was at 65.56.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 63.94 with a total traded volume of $3.4 billion.

CPI inflation 9.52 percent in August - govt

The annual consumer price inflation eased marginally in August to 9.52 percent in line with expectations from 9.64 in July, government data showed on Thursday.
Food prices for consumers also eased to an annual 11.06 percent in August from 11.24 percent in July.
A Reuters poll published this week forecast that consumer inflation would ease marginally to 9.55 percent year-on-year in August.
Unlike most central banks, the Reserve Bank of India mainly uses the wholesale price index (WPI) for setting its monetary policy. August WPI data is due to be released on Monday.
(Reporting by Rajesh Kumar Singh; Writing By Sruthi Gottipati; editing by Malini Menon)

Sensex snaps 5-day winning streak, falls over 200 points

The BSE Sensex fell more than 1 percent on Thursday to snap a five-day winning streak as lenders such as HDFC Bank dropped on profit-taking, while sentiment also waned as the rupee reversed part of its recent gains.
Caution prevailed ahead of factory output and CPI data, scheduled for release later in the day even as foreign institutional investors remained net buyers of shares, bringing their total to nearly 57.8 billion rupees over the previous five sessions.
The rupee also fell after five days of gains, even as teh Reserve Bank of India (RBI) likely sold dollars via state-run banks starting at around 63.95 levels to prevent further weakness in the currency.
Dealers say the wholesale price inflation data and tempered expectations over the pace at which the U.S. Federal Reserve would withdraw its stimulus after its meeting next week was also seen weighing on the market.
"Macro data, Fed meet hold importance, but I see RBI policy on September 20 to be a silver lining amid the dark clouds," said Deven Choksey, managing director of KR Choksey Securities.
The Sensex fell 1.08 percent, or 215.57 points, to end at 19,781.88, retreating from their highest level in nearly 1-1/2 months in the previous session.
The broader Nifty fell 1.06 percent, or 62.45 points, to end at 5,850.70, closing below the psychologically important 5,900 level after gaining nearly 11 percent over the previous five sessions.
Among banks, private lenders ICICI Bank (ICBK.NS) fell 1.9 percent, while HDFC Bank (HDBK.NS) ended 2.1 percent lower mainly on profit-taking.
Wholesale-funded banks were hit more. Yes Bank (YESB.NS) slumped 7.4 percent, while Indusind Bank (INBK.NS) ended 5.4 percent lower.
Jaiprakash Associates (JAIA.NS) slumped 11.6 percent after earlier rising as much as 2.1 percent on profit-taking. It agreed to sell its cement plant to UltraTech Cement (ULTC.NS) on Wednesday.
Jaiprakash Associates' shares had risen about 27 percent in the previous five sessions in anticipation of such a sale, dealers said.
Shares of Tata Motors (TAMO.NS), India's largest automaker by revenue, fell 2.1 percent after the company said on Wednesday its global wholesale vehicle sales fell 16 percent on year in August, hit by a drop in passenger vehicle sales.
Oil and Natural Gas Corp (ONGC.NS) fell 3.6 percent after India's oil secretary said India will decide on raising the retail prices of diesel and cooking gas in a few weeks, disappointing traders who were looking for an immediate decision.
Among the gainers, IDFC (IDFC.NS) shares rose 2.8 percent after the Reserve Bank of India on Wednesday lifted restrictions placed on foreign investors purchasing the company's stock as their shareholding fell below the prescribed limit.
Shares in Housing Development Finance Corp (HDFC.NS) ended 0.3 percent higher after earlier falling as much as 2.3 percent as FTSE increased its "investability weight" to 100 percent from 74 percent in its global equity index series, as per its website.

Syria vows to give up chemical weapons, Obama cautious about deal

Syria accepted a Russian proposal on Tuesday to give up chemical weapons but U.S. President Barack Obama said it was too early to tell if the initiative would succeed and he vowed to keep military forces at the ready to strike if diplomacy fails.
In a televised address to Americans, Obama pledged to explore Russia's proposal for Syria to place its chemical weapons under international control, while expressing skepticism about the initiative.
He said he had asked the U.S. Congress to postpone a vote on authorizing military action while Washington and its allies try to pass a United Nations resolution requiring Syrian President Bashar al-Assad to give up the weapons in a verifiable way.
In a sign of how hard that will be, Russian President Vladimir Putin said earlier that the chemical weapons plan would only succeed if Washington and its allies rule out military action.
In what amounted to the most explicit, high-level admission by Syria that it has chemical weapons, Foreign Minister Walid al-Moualem said in a statement shown on Russian state television that Damascus was committed to the Russian initiative.
"We want to join the convention on the prohibition of chemical weapons. We are ready to observe our obligations in accordance with that convention, including providing all information about these weapons," Moualem said.
"We are ready to declare the location of the chemical weapons, stop production of the chemical weapons, and show these (production) facilities to representatives of Russia and other United Nations member states," he said.
Obama said there had been "encouraging signs" in recent days, in part because of the U.S. threat of military action to punish Assad for what Washington says was the use of poison gas to kill 1,400 civilians in Damascus on August 21.
"It is too early to tell whether this offer will succeed," Obama said. "And any agreement must verify that the Assad regime keeps its commitments. But this initiative has the potential to remove the threat of chemical weapons without the use of force."
Moscow has previously vetoed three U.N. Security Council resolutions that would have condemned the Syrian government over the conflict.
The latest proposal "can work only if we hear that the American side and all those who support the United States in this sense reject the use of force," Putin said in televised remarks.
Obama said he was sending Secretary of State John Kerry to meet Russian Foreign Minister Sergei Lavrov in Geneva on Thursday for further talks, and he himself would continue discussions with Putin.
Amid the whirlwind of diplomatic activity focused on the response to the chemical weapons attack, the civil war resumed in earnest on Tuesday with Assad's jets again bombing rebel positions in the capital.
UNITED NATIONS
An initial U.N. Security Council resolution, drafted by France, would demand that Syria make a complete declaration of its chemical weapons program within 15 days and immediately open all related sites to U.N. inspectors or face possible punitive measures.
The French draft resolution, seen by Reuters, adds that the Security Council would intend "in the event of non-compliance by the Syrian authorities with the provisions of this resolution ... to adopt further necessary measures under Chapter VII" of the U.N. Charter.
Chapter 7 of the U.N. Charter covers the 15-nation Security Council's power to take steps ranging from sanctions to military interventions. It is the reference to Chapter 7, U.N. diplomats say, that has made Russia reluctant to support the initial French draft.
Russia has made clear it wanted to take the lead on any resolution. Lavrov told his French counterpart that Moscow would propose a U.N. draft declaration, the Russian Foreign Ministry said in a statement.
Obama said he would work with allies as well as Russia and China, both of which have veto powers on the Security Council, to craft a U.N. resolution. He gave no timetable for how long he would wait for such talks to play out.
"Meanwhile, I've ordered our military to maintain their current posture to keep the pressure on Assad and to be in a position to respond if diplomacy fails," Obama said.
The president also reiterated his arguments for why it would be in the national security interests of the United States to punish Syria for using chemical weapons if diplomacy fails.
"If we fail to act, the Assad regime will see no reason to stop using chemical weapons," Obama said. "As the ban against these weapons erodes, other tyrants will have no reason to think twice about acquiring poison gas and using them."
PUTIN: "NO THREAT OF FORCE"
The United States and France had been poised to launch missile strikes to punish Assad's forces, which they blame for the chemical weapons attack. Syria denies it was responsible and, with the backing of Moscow, blames rebels for staging the attacks to provoke U.S. intervention.
The White House said Obama, British Prime Minister David Cameron and French President Francois Hollande had agreed in a telephone call on their preference for a diplomatic solution, but that they should continue to prepare for "a full range of responses."
While the prospects of a deal remain uncertain, the proposal could provide a way for Obama to avoid ordering military strikes. Opinion polls show most Americans are opposed to military intervention in Syria, weary after more than a decade of war in Iraq and Afghanistan.
Whether international inspectors can neutralize chemical weapons dumps while war rages in Syria remains open to question.
Western states believe Syria has a vast undeclared chemical arsenal. Sending inspectors to destroy it would be hard even in peace and extraordinarily complicated in the midst of a civil war.
The two main precedents are ominous: U.N. inspectors dismantled the chemical arsenal of Iraqi leader Saddam Hussein in the 1990s but left enough doubt to provide the basis for a U.S.-led invasion in 2003. Libyan leader Muammar Gaddafi was rehabilitated by the West after agreeing to give up his banned weapons, only to be overthrown with NATO help in 2011.
SYRIAN REBELS DISMAYED
The Syrian war has already killed more than 100,000 people and driven millions from their homes. It threatens to spread violence across the Middle East, with countries endorsing the sectarian divisions that brought civil war to Lebanon and Iraq.
The wavering from the West dealt an unquestionable blow to the Syrian opposition, which had thought it had finally secured military intervention after pleading for two and a half years for help from Western leaders who vocally opposed Assad.
The rebel Syrian National Coalition decried a "political maneuver which will lead to pointless procrastination and will cause more death and destruction to the people of Syria."
Assad's warplanes bombed rebellious districts inside the Damascus city limits on Tuesday for the first time since the poison gas attacks. Rebels said the strikes demonstrated that the government had concluded the West had lost its nerve.
"By sending the planes back, the regime is sending the message that it no longer feels international pressure," activist Wasim al-Ahmad said from Mouadamiya, one of the districts of the capital hit by the chemical attack.
The Russian proposal "is a cheap trick to buy time for the regime to kill more and more people," said Sami, a member of the local opposition coordinating committee in the Damascus suburb of Erbin, also hit by last month's poison gas attack.
Troops and pro-Assad militiamen tried to seize the northern district of Barzeh and the eastern suburb of Deir Salman near Damascus airport, working-class Sunni Muslim areas where opposition activists and residents reported street fighting.
Fighter jets bombed Barzeh three times and pro-Assad militia backed by army tank fire made a push into the area. Air raids were also reported on the Western outskirts near Mouadamiya.
However, Damascenes in pro-Assad areas were grateful for a reprieve from Western strikes: "Russia is the voice of reason. They know that if a strike went ahead against Syria, then World War Three - even Armageddon - would befall Europe and America," said Salwa, a Shi'ite Muslim in the affluent Malki district.
(Additional reporting by John Irish in Paris, Louis Charbonneau at the United Nations, Thomas Grove and Steve Gutterman in Moscow and Steve Holland, Jeff Mason, Mark Felsenthal, Patricia Zengerle, Arshad Mohammed, Richard Cowan, Paul Eckert and Roberta Rampton in Washington

Commodities A pawn shop worker prepares jewellery and luxury watch for photographs at Easy Money pawn shop in Bangkok, August 27, 2013. REUTERS/Athit Perawongmetha/Files Gold hits three-week low as easing Syria tensions dent safe-haven appeal Gold slipped to a three-week low on Wednesday before recovering on bargain hunting, but the precious metal was losing its safe-haven appeal for investors on hopes a U.S. military strike against Syria could be averted. Full Article Follow Reuters Facebook Twitter RSS YouTube Most Popular Most Shared Motorola now shipping 100,000 Moto X phones weekly from Texas 4:38am IST Apple's two new iPhones target high and low-end markets 5:37am IST Apple's two new iPhones target high, low-end markets 3:34am IST Nissan takes on Honda, Ford with new Rogue crossover 10 Sep 2013 Rupee gains as Syrian tensions ease 9:20am IST REUTERS SHOWCASE New iPhone New iPhone Apple takes wraps off cheaper, multi-hued iPhone 5C Article Negative Outlook Negative Outlook DoubleLine's Jeffrey Gundlach calls Indian stock market 'scary'. Full Article New Dow Components New Dow Components Dow Jones index announces biggest shake-up in a decade. Full Article Car Sales Car Sales Car sales up 15.4 pct in August; sales likely to fall in 2013/14. Full Article | Related Story Expansion Drive Expansion Drive JLR to create 1,700 UK jobs in new sports car drive. Full Article Reuters Summit Reuters Summit Unilever CFO stands by India as long-term bet Full Article Legal Loss Legal Loss Senegal wins court case against Arcelor Mittal - government. Full Article Tracking the Rupee Tracking the Rupee Our special coverage on the falling rupee Full Coverage Buy, Sell or Hold? Buy, Sell or Hold? Confused while buying stocks? Get buy, sell or hold recommendations from VantageTrade. Full Coverage Reuters India Mobile Reuters India Mobile Get the latest news on the go. Visit Reuters India on your mobile device. Full Coverage Foreign investors continue to buy shares

Reuters Market Eye - Foreign institutional investors (FIIs) were net buyers of Indian shares for a fourth consecutive session on Tuesday.
FIIs provisionally bought 25.6 billion rupees worth of Indian shares on Tuesday, exchange data shows, and a total of 50.5 billion rupees worth over the previous four sessions.
Indexes have rallied over the past four sessions, with the broader Nifty up nearly 10 percent in that period, on hopes government will announce steps to boost the economy.
Speculation has centered on measures to attract foreign inflows, curb non-essential imports, and a potential hike in diesel prices that would help improve confidence about the government's finances.

Aug gold ETF outflows highest in five years on profit-booking

Gold ETF schemes posted their biggest monthly outflow in more than five years in August as the rupee's depreciation boosted domestic gold prices, prompting investors to book profits in these funds.
The gold ETF category saw outflows of R588 crore in August, latest data put up on the website of Amfi, the mutual fund industry body, show. This is the highest net monthly outflow since March 2008.
The rupee depreciated as much as 8% against the dollar in August. The depreciation, coupled with a spurt of about 5% in international gold prices, triggered a surge in domestic gold prices during the month. The hike in the customs duty on gold imports also pushed up prices to some extent, said experts.
“Investors who could not book profits from gold ETFs during the previous highs chose these highs to book profits,” said Dhruva Chatterji, senior investment analyst, Morningstar India. Domestic gold prices touched a record high of R32,943 per 10 grams on August 29.
Another possible reason for the ouflows picking up in August is the reluctance of fund houses to accept fresh inflows into the category following RBI's new guidelines, dated July 22, aimed at restricting gold imports. The new guidelines have made it difficult for fund houses to source physical gold as banks have decided to stop selling gold to MFs pending clarity on the matter, according to fund officials. Funds are required to hold physical gold equivalent to the value of units sold to the investors.
As of August 31, the assets under management of gold ETFs amounted to R11,828 crore, up 10.8% from R10,669 crore in the previous month. In the last three months, gold ETFs have seen outflows of R901 crore.
Among other categories, equity schemes saw net inflows of R467 crore in August compared with outflows of R1,652 crore in the previous month. MF equity schemes have seen inflows in only 16 months after the entry load was done away with in August 2009.
“We have seen this trend in the past as well; whenever the market corrects, a substantially number of investors put in

Gold price hits 3-week low as easing Syria tensions dent safe-haven appeal

 

Gold slipped to a three-week low on Wednesday before recovering on bargain hunting, but the precious metal was losing its safe-haven appeal for investors on hopes a US military strike against Syria could be averted.
Syria has accepted a Russian proposal to give up chemical weapons but US President Barack Obama said it was too early to tell if the initiative would succeed, vowing to keep military forces at the ready to strike if diplomacy fails.
Gold, which has fallen more than 18 percent this year, is also being hurt by expectations the US Federal Reserve will opt to taper its monetary stimulus programme after the Fed's Open Market Committee meeting on Sept. 17-18.
Spot gold hit a low of $1,356.85 an ounce, its weakest since August 22, and was steady at $1,364.01 by 0343 GMT. The Fed's three quantitative easing schemes have buoyed prices of gold and other commodities.
"It's really a confluence of three things," said Mark Keenan, a cross-commodity research strategist at Societe Generale in Singapore.
"Currency weakness, specifically in India, the tapering that we believe will be announced in (FOMC) meeting, and a slight deterioration in the requirement of having a safe haven in the light of these strikes in Syria possibly being averted." US gold was little changed at $1,364.20 an ounce.
Asian shares rose on Wednesday, on track to post their 10th straight day of gains, while investors gave the safe-haven yen a wide berth as optimism for the Chinese economy grew and worries about US military strikes on Syria receded.
US crude for October delivery was down 54 cents at $106.85 a barrel.
"Over the days ahead, we likely will see various markets continue to breathe a bit easier, meaning that the crude oil markets will likely remain very vulnerable to more downside pressure," said Edward Meir, an analyst at INTL FC Stone.
"Although gold may decline in sympathy as well, we think it is in store for a much larger break once the Fed announces its tapering decision next week."
The physical market has yet to pick up in Asia and other regions even though gold