Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Is Rupee slide a cause for worry?
Tue, 6 Jan Pre-Open

Weakness in the Indian rupee is unlikely to go in a hurry. Rupee has been under pressure since the US Federal Reserve pulled the plug on its quantitative easing program and subsequently hinted at early rate-hike in FY15. This has set the dollar in a strong rally against major currencies with the dollar index reaching its highest level since March 2006.

As if this was not enough, even the domestic factors seem to be working against the rupee. The country's fiscal deficit has already reached 99% of the full year target within the first eight months of FY15. Poor tax revenue collections by the government on account of tepid economic growth is acting as a headwind in achieving the full year fiscal deficit target of 4.1% of GDP announced earlier. This is likely to exert further pressure on the rupee. The consumer price inflation is expected to rise in the January-March 2015 period due to the low base effect. Thus the combination of rupee depreciation and high inflation together is likely to make the case stronger for delay in rate cut by Reserve Bank of India (RBI). This can act as a dampener for corporate India in the short run.

To add to this, the government has already rolled back the excise duty concessions for the automobile and consumer durable industries in order to shore revenues. With only three months left in FY15, funds cannot be raised through disinvestment. So the government may have take refuge by cutting down capital expenditure spends to meet its fiscal deficit target. This is likely to adversely impact the liquidity of infrastructure companies. Thus sliding rupee may affect the financial health of a host of industries even as sectors such as IT, pharma and textiles stand to benefit from increased export realizations. Notwithstanding as the long-term fundamentals for the economy remain firmly in place, the macro-economic conditions are expected to return to more benign levels in future.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Is Rupee slide a cause for worry?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.