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Sensex Remains Flat; Consumer Durable Stocks Witness Buying Interest
Wed, 30 Nov 11:30 am

After opening the day on a flat note, the Indian share markets registered marginal gains and continued to trade near the dotted line. Sectoral indices are trading in the green while stocks in the consumer durables sector and capital goods sector are witnessing maximum buying interest.

The BSE Sensex is trading up 85 points (up 0.3%) and the NSE Nifty is trading up 33 points (up 0.4%). The BSE Mid Cap index is trading up by 0.5%, while the BSE Small Cap index is trading up by 1%. The rupee is trading at 68.53 to the US$.

As the demonetisation saga rolls on, people are busy gauging the impact of this move on the economy. And the government is seen announcing new amendments to the demonetisation move.

In a recent move, the Reserve Bank of India (RBI) has announced that withdrawals from Jan Dhan accounts would be capped at Rs 10,000 per month.

As per an article in the Economic Times, the central bank said that fully KYC compliant holders may withdraw Rs 10,000 from their account every month. The RBI further added that the branch managers may allow further withdrawals beyond Rs 10,000 with 'current applicable limits' for normal accounts only by ascertaining the genuineness of such withdrawals along with proper documentation.

While demonetisation is being hailed as the panacea to suck out the black money from the system, the move has come at a cost to the economy in many ways. As one of our latest editions of The 5 Minute WrapUp says, 'We have all been caught up in what is seen. There's not enough attention being paid on what is unseen.' The article explains some of the unseen effects of demonetisation on corporate profitability, real estate, interest rates, stock markets, etc.

The current economic situation in India is unprecedented. The need of the hour is competent, honest and unbiased views on the government's war on cash aka demonetisation.

We believe, Vivek Kaul has done an excellent job in this regard. You could do no better than read Vivek Kaul's insightful little report on this subject, Demonetisation: The Good, Bad and Ugly. It has some great information on how demonetisation could impact things like your investment and your property.

In the news from currency markets, the dollar is witnessing buying interest this week. Most of the buying interest is seen on the back of positive US economic data and hopes for a US interest rate hike in December. On the other hand, rupee's value has depreciated rapidly this month. One might be tempted to attribute this to the government's demonetisation move . However, there's more to it than that.

The rupee has actually appreciated versus most other currencies, including the Euro and the Japanese yen. This is evident in the chart below:

It's not the rupee that's falling, but the US$ that's rising

As Tanushree Banerjee wrote in The 5 Minute WrapUp recently, 'This makes it clear that it is more a dollar rally that we are looking at rather than a direct hit to the rupee's value. And why is the dollar rising so rapidly? Investors seem to be betting that the Donald Trump administration will increase spending and spark an increase in inflation. Many around the world expect the US Federal Reserve to raise its short-term interest rate target next month, as well as raise its longer term rate forecast. This expected tightening of monetary policy has taken the benchmark US yield to a sixteen month high, helping spur the dollar rally.'

To keep a tab on the movements in the dollar and other currencies, you can read the stock market commentary from the Daily Profit Hunter team. Their commentary tracks the developments in the global economy as well as stock, currency and commodity markets.

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

Read the latest Market Commentary

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Sep 26, 2017 03:35 PM

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