Macro headwinds continue to roil markets as rupee plunges to new low

India’s stock markets saw a fresh round of sell-offs on Wednesday after Brent crude prices climbed to a four-year high of $85 a barrel and the rupee dropped to a new low of 73.34 against the dollar.

Investors pulled out of equity markets on worries that the spike in oil prices and fall in the rupee would adversely impact the economy. Investor sentiment has already been fragile following defaults by Infrastructure Leasing & Financial Services (IL&FS), a lender to the infrastructure sector. The benchmark Sensex closed at 35,975.63, down 551 points, or 1.51 per cent, the most since March 16. The Nifty declined 150 points, or 1.36 per cent, to end at 10,858, a level last seen on July 9.

Brent crude prices were hovering above $85 a barrel — the most since November 2014 — on fears that the impending sanctions on Iran’s petroleum industry would lead to constricted supplies. Oil prices have gained 22 per cent since mid-August and are up more than 50 per cent in the past one year. The surge has come at a time when the dollar is gaining against most global currencies amid the US Federal Reserve embarking on monetary tightening.

Business Standard YouTube channel

Today's picks: From TCS to Tata Motors, hot stocks to watch on Friday

Nifty
Current: 10,977 (fut: 11,043)
Target: NA
Stop-long positions at 10,950. Stop-short positions at 11,125. Big moves could go till 11,175, 10,900. A long 10800p (111) short 10,700p (86) will pay 10-15 if the index drops to 11,900.

Bank Nifty
Current: 25,042 (futures: 25,269)
Target: NA
Stop-long positions at 25,100. Stop-short positions at 25,400. Big moves could go till 25,600, 24,900. Trend remains negative.

TCS
Current price: Rs 2,188
Target price: Rs 2,220
Keep a stop at Rs 2,170 and go long. Add to the position between Rs 2,210 and Rs 2,215.
Book profits at Rs 2,220.

Tata Motors
Current price: Rs225
Target price: Rs220
Keep a stop at Rs 228 and go short. Add to the position between Rs 221 and Rs 222. Book profits at Rs2 20.

With 47 agitations a day, Tamil Nadu protests put investors in a spot

Tamil Nadu Protest - Recently, a delegation from a global consulting firm visited Tamil Nadu and met with industrialists, industry chambers, politicians and journalists. The members were on a mission to understand the investment climate and ascertain whether the state was still a safe place for investors.

The questions over the investment worthiness of Tamil Nadu were puzzling given that the state is still the putative champion in terms of foreign direct investment inflows, ranking fourth in 2017 behind only Maharashtra, Delhi and Karnataka. However, their cause of worry came from a different quarter: ...Read Full Coverage

RBI to the rescue with likely $15 billion bond-purchase to cap yields

Embattled investors in India’s government bond market are hoping to see the light at the end of the tunnel as the central bank comes to their rescue.

Benchmark yields have likely peaked for 2018 after hitting a three-year high this week, and the Reserve Bank of India’s debt purchases will keep a lid on them even as higher inflation boosts the odds of monetary tightening, according to a survey of traders and fund managers.


The RBI is likely to buy 1 trillion rupees ($15 billion) of securities in the current fiscal year, the survey showed, as authorities seek to cool yields and ensure a smooth passage for the government’s borrowing program. The first tranche is due Thursday.

“At current levels, two rate hikes are already in the price and I don’t see yields surging much,” said Badrish Kulhalli, head of fixed income at HDFC Standard Life Insurance Co. in Mumbai. The purchases would help cap yields and provide an exit to state-owned banks -- the biggest holders of sovereign debt -- and others with stuck positions, he said.