15th june, 2013
Rupee traded volatile this week, in the first session of the week it traded weak against the dollar & crossed all time low of 57.33 to make a new low of 58.98 taking cues from weak domestic fundamentals, record current account deficit, high inflation & debt outflows.
Also the Index of Industrial Production (IIP) data for April was out at 2 percent; lower than the 2.7 percent that the market was expecting whereas the Consumer Price Index-based inflation for May came in at 9.31 percent which was above the estimates. In the second session Rupee traded strong for the three consecutive days against the dollar & tried to recover from the fall, taking cues from the strong local equities which closed on a positive note on last day of the week as the inflation data was out & reading was the lowest in more than three years. Inflation slowed for a fourth straight month in May to 4.7 percent from a year earlier.
The wholesale price index, India's main inflation came to an annual 4.89 percent in April. Looking at the weak rupee RBI will have to check on the lowering policy rates on Monday despite of the economy slowing to a decade-low level. The trading range for the Spot USD/INR pair is expected to be within 57.00 to 58.00.
Recommended to be cautious & Buy USDINR Futures on dips with the appropriate stop loss as Rupee at this stage is expected to depreciate more against dollar. Pivot Point for the Pair is at 57.99 & below is the Support & Resistance levels.
Financial markets remained volatile this week, pulled in both directions by positive economic data and concerns over what future policy tightening would bring. Disappointment with the Bank of Japan's policy statement caused yet another week of selloffs in the Nikkei. At home, concerns over monetary policy also dictated much of the action in equity markets, with markets continuing to second-guess the timing of the Fed's QE-tapering. All major indexes declined through the first half of the week. While they rebounded somewhat on Thursday, on better-than-expected retail sales data, the S&P 500 was down 0.7% from a week ago.
The Retail sales rose by a healthy 0.6% in May, supported by rising auto sales. The continued rise in spending despite higher payroll taxes and relatively tepid wage growth suggests that the improvement in household balance sheets and the corresponding rise in consumer confidence are providing an important offset. Moreover, consumers are not the only ones feeling upbeat. The latest upturn in spending and optimism among consumers and businesses gives hope that the economic fundamentals remain solid despite the expected near-term slowdown due to fiscal tightening.
Recent economic indicators have been generally positive and consistent with the gradual strengthening of US economic activity. Despite this, uncertainty surrounding the tapering of the Fed's QE program continues to generate volatility in financial markets. We do not expect any change in current policy in the FOMC's meeting next week.
On that note, Standard & Poor’s revised its US credit rating outlook from "negative" to "stable" earlier this week - citing the latest progress in U.S fiscal balances. However, the agency fell short of restoring the U.S.' previous AAA rating, which it cut in August 2011.
Gold prices were pressured this week on Thursday after Stronger-than-expected U.S. jobs data underscored expectations. Demand from the world’s top gold buyers, India and China, is seen slowing from peak levels witnesses in April after prices plunged to their lowest in years. Demand from India and China has been a big factor in holding up gold prices.Net gold imports in India fell to $36 million in the second half of May from an average of $135 million in the first half, according to India’s finance minister.
This came after the Reserve Bank of India (RBI) extended imports restriction by a third and curbed gold financing by on banks early June in an effort to cut its current account deficit. Holdings in the SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, fell 0.63 percent to 1,003.53 tons on Thursday, their lowest since February 2009.
SMEs/Corporate Advisory Desk at Ludhiana - Indo Pak International Expo 2013 from 15th – 18th February 2013 in Ludhiana, Punjab
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