Of Bitcoin Cash, Rising Rupee, and Top Cues in Focus Today

Thu, 21 Dec Pre-Open

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Share markets in India witnessed volatile trading activity throughout the day yesterday and ended their session on a weak note.

At the closing bell yesterday, the BSE Sensex stood lower by 59 points (down 0.2%) and the NSE Nifty closed down by 19 points (down 0.2%). The BSE Mid Cap index ended the day up by 0.4%, while the BSE Small Cap index ended the day up by 0.8%. Gains were seen across most sectors with stocks in the realty sector and stocks in the metal sector, leading the gains. While stocks in the banking sector lost the most.

Top Stocks in Focus Today

Dewan Housing Finance Corporation share price will be in focus today. The stock witnessed buying interest yesterday after the company informed that it is looking to issue secured redeemable non-convertible debentures amounting to Rs 750 million.

From the steel sector, market participants will be tracking Tata Steel share price. The company witnessed selling pressure yesterday after the news that its board approved raising Rs 128 billion through a mega rights issue, to fund an additional steel capacity of 5 million tonnes in Odisha.

From the telecom sector, market participants will be tracking Bharti Airtel share price as the company's board approved has announced an arrangement for takeover of consumer mobile business of Tata Teleservices, in a deal involving issue of equity and preference shares.

Market participants will also keep tabs on IndusInd Bank share price and Bharat Financial Inclusion (BFIL) share price today as the Competition Commission of India (CCI) yesterday approved the proposed amalgamation of the companies.

Bitcoin Cash Listed on Coinbase

In the news from crypto currency space, the price of bitcoin fell more than 10% yesterday. Prices touched as low as US $15,800 at a cryptocurrency exchange Bitstamp, as the rival currency - Bitcoin Cash was allowed to list on Coinbase, which is one of the biggest global crypto exchanges.

Bitcoin Cash was split off from the original bitcoin on August 1, after a group of developers decided to try to improve bitcoin transaction speeds and costs.

However, despite the above drop, bitcoin managed to pare some of the losses.

Note that cryptocurrencies have no central bank backing and have not yet been regulated. Yet, these seem to have found favour among a large number of people, with demand growing every day. There are over 800 cryptocurrencies in existence today, with new ones being added to the list every day.

While the world of digital currencies is intriguing, it can get very confusing for the layman. Our team member, Ankit Shah, Research Analyst, has decided to study cryptocurrencies and help our readers understand them.

Ankit has released a premium guide for Equitymaster Insider subscribers, titled Bitcoin 101 which contains everything you need to know about bitcoins and other digital currencies.

If you haven't been receiving Ankit's insights, get on the Insider's list now.

Rupee Scales 3-Month High

From currency markets, rupee was seen hovering near its 3-month high yesterday. The domestic currency witnessed buying interest and built its momentum after the BJP's win in Gujarat and Himachal Pradesh (HP) Assembly polls.

However, it cooled off yesterday ahead of the release of the minutes from the Reserve Bank of India's (RBI) and ended the session lower.

The appreciation in the rupee comes as a welcome breather for importers in India. A softer rupee helps importers to buy goods and services at a cheaper rate that earlier. This is vital for a developing economy that relies heavily on imports. This bodes well for the Indian economy as higher imports normally mean increased economic activity.

But on the other hand, the rise in rupee can spell trouble for exporters. The exporters are at a disadvantage owing to the currency appreciation as this renders their produce expensive in the international markets as compared to other competing nations whose currencies haven't appreciated on a similar scale. This tends to take away a part of the advantage from Indian companies, which they enjoy due to their cost competitiveness.

Nonetheless, a stronger rupee will pull down commodity prices. This will help in keeping a tab on the rising inflation.

While there are advantages as well as disadvantages of a rising rupee, one needs to understand whether the rise in the rupee is sustainable to derive any reasonable conclusion at this stage.

Crude Oil Continues its Momentum

In the news from commodity markets, crude oil is witnessing buying interest this week. Gains are seen on the back of expectations of a fall in US crude inventories and by the ongoing outage of the North Sea Forties pipeline system.

The shutdown of the Forties North Sea pipeline has hit supply levels for crude oil from a market that was already tightening due to OPEC-led production cuts.

Note that crude oil prices have been witnessing a rising trend this year. However, rising oil price is not good news from India's perspective.

As we wrote in a recent edition of The 5 Minute WrapUp...

• Fiscal revenues are at risk. Particularly if the government is forced to consider a cut in fuel excise duties due to a rally in oil prices. In recent times, a sharp jump in excise collections has helped indirect tax collections. Any risk to revenues and subsequent threat to the fiscal deficit target at 3.2% of GDP would require tighter spending cuts.
  
  Secondly, the impact on inflation needs to be monitored. This narrowing the central bank's scope for further rate cuts.
  
  Lastly, low crude prices were a positive growth impetus through higher discretionary incomes for households and lower input costs for manufacturers and farmers. Part of this benefit is likely to be eroded as retail fuel costs rise. As for corporations, expansion in gross margins caused by falling commodity prices is also likely to wane, pressurising profitability.

You can read the entire article here.

Also, to keep a tab on the movements in crude oil and other commodities, 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.

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