Rupee woes continue to sink markets

Mon, 19 Aug Closing

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Indian equity markets had another rough trading session today. Benchmark indices traded near one year lows amid weak global cues. There was also selling pressure by institutional investors after the rupee, which touched a fresh all-time low of Rs 62.78/$, raising worries of a widening current account deficit and higher inflation. While the BSE-Sensex closed lower by 290 points, the NSE-Nifty closed lower by 93 points. BSE Mid Cap and the BSE Small Cap closed on a negative note. Auto and Banking stocks were the biggest losers.

As regards global markets, Asian indices closed mixed. European indices have also opened in the red. The rupee was trading at Rs 62.67 to the dollar at the time of writing.

According to a leading financial daily, ICICI Bank will continue to repatriate capital from its subsidiaries in Canada and United Kingdom (UK). The move is aimed to improve the return on equities (ROE) of the two overseas subsidiaries. The private sector lender aims to achieve a double digit ROE in both the subsidiaries over a period of three years. The improvement in ROEs will be both on account of capital repatriation as well as business growth in those geographies. ICICI Bank Canada had repatriated Canadian Dollar 75 m of equity capital to its parent in the first quarter of this financial year. The bank has also received capital repatriation of US $100 m from its subsidiary in UK. The bank, however, did not offer details on the timeframe for the next round of capital repatriation.

According to a leading financial daily, Tata Power along with Adani Power may finally get a chance to increase electricity tariff from their respective power plants in Gujarat. A high level panel headed by Deepak Parekh has recommended increasing tariff for both the imported coal-based thermal stations. The panel has submitted its report to Central Electricity Regulatory Commission last week. The regulator would seek responses from all stakeholders shortly before giving a go-ahead to the panel's recommendations. In the current scenario, Tata Power may get a compensatory tariff of 45-55 paise for its 4,000 MW Mundra plant, while Adani Power may be allowed to increase tariff by 50-60 paise for its 4,620-MW at the same place. The Commission's decision to permit a tariff increase will affect consumers of seven electricity distribution utilities in Gujarat, Maharashtra, Rajasthan, Punjab and Haryana.