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Market Update
for the week ended October 27, 2000
Rupee hits a new low..awaiting further signals.
Rupee saw low volumes on its opening on Monday.It opened 46.35/36 and
saw a low of 46.3650/3725 as some foreign banks were seen buying Dollars
on behalf of foreign funds. The Indian stock market is going through not
so good days. The foreign funds in the first fortnight of October have
sold stocks in excess of Rs.320 crores (1 crore = 10 mn.). Tuesday too
saw Rupee marginally weaker as early morning bids saw Rupee at 46.40/41,
close to its all time low of 46.45, which it had touched on October
13.It lost around seven paise and closed at 46.43/44.
Rupee finally breached the psychological barrier of 46.45 on Wednesday.
Rupee saw a new low of 46.64/67 during the day losing around 23 paise.
With the new low in place the Indian Rupee has depreciated about 7.00%
in this financial year. Market was closed on Thursday on account of
Diwali festival. Friday saw a thin market and Rupee closed at a new low
of 46.74/75 per Dollar.
In a new reporting fortnight Call rates opened marginally higher at
8.75%-9.25%. Demand for funds were seen lower during the day. Reserve
Bank of India (RBI) kept the 3-day Repo auction rate at 8.50%. Even the
4-day Repo rate went at 8.50%. The forwards were steady during the day
but closed slightly weaker. Premiums were up across all maturities by
0.05% to 0.22%. Six-month and one-year forward premiums closed almost at
similar levels at 4.35% and 4.36%. Call rates were seen lower on Tuesday
and Wednesday as RBI announced cut in Repo rates. First it announced a
cut in rates of one and three day by 0.25% to 8.25% on Tuesday. The
second cut on Wednesday saw a further cut of 0.25% to 8.00%. Some
respite for bond traders as prices were seen higher by 15-20 paise.
Premium levels closed lower on this as some banks were seen receiving
(buy and sell forward).
Call rates remained stable on Friday.Repo rate cut has brought the
rates to 8.00%-8.25%. RBI in its auction of 11.03% 12 year paper set a
cut of Rs.95.81 (11.70% implied yield) for Rs.3,000 crores. The auction
completes around 70 per of Government’s borrowing programme for the
year. The forward premiums remained stable on Wednesday and Friday.
Friday saw premiums marginally firmer. Six-month and one-year forward
premiums opened at 4.38% and 4.37% and closed at 4.30% and 4.31%
respectively.
In the other major events of the week the oil prices (Brent) have been
in a range and around USD 31-32 per barrel. In the currency market Euro
hit a new low and British Pound hit another low. Euro broke the previous
lifetime low of 0.8325 and touched 0.8225-8230 levels and the British
Pound saw a low of 1.4185/4190 during the week.
The Indian foreign exchange reserves came down once again as on week
ending October 13,2000.The reserves came down from USD 35.340 bn. to USD
35.042 bn. However the reserves are likely to improve upon the success
of the State Bank of India’s India Millenium Bond issue. The issue
is likely to raise in excess of USD 2 bn. The country’s year on
year inflation rate based on the wholesale price index saw a marginal
improvement as inflation levels dropped from 7.56% to 7.03% in the week
ended October 7,2000.
The outlook for the coming week (Oct 30-Nov 03) is that Rupee is likely
to be in a range of 46.68- 46.95. Call rates are expected to open around
8.25% - 8.50% and the six-month forward premiums are likely to be in the
range of 4.30% - 4.50% on Monday. |