knowledge plus series i 200713
DESCRIPTION
Last week we have discussed on "A Ray Of Hope" Kindly download details from the following link : http://www.youtube.com/watch?v=xqSfw7xUJkY In this issue, we would be discussing on "Rupee Hits New Low At 61.20 against Dollar" Kindly download details from the following link : http://www.youtube.com/watch?v=by7U7gH7lxg&feature=youtu.be "Knowledge Plus for Wealth + " will give you the overview of the recent happenings in the financial market. Kindly share your valuable feedback at [email protected] to help us serve you better. ThanksTRANSCRIPT
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VALUE PLUS - The Family Office
KNOWLEDGE PLUS
For Wealth Plus
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Last week at the Financial Markets!!!
News Impact
• Consumer price index (CPI) inched up to 9.87% in June, against 9.31 % in May.
• Savings will be reduced and it may adversely affect financial market.
• Investment cycle will be delayed.
• RBI took measures to control rupee volatility.
• Cost of borrowing will increase.• Rupee may appreciate against
other currencies.
• FDI inflow in India increased 25 percent year-on-year to $ 2.32 billion or Rs 12,623 crore in April.
• Demand of rupee increased.• Forex reserves will rise and it will
support to solve current account deficit problem.
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Last week at the Financial Markets!!!
SENSEX rose by 191.38 points (0.96%) and closed to 20149.85 at end of the week.
(FIIs) were net sellers in equity segment and debt segment with outflow of Rs. 5714.80 and 2722.40 crore respectively.
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Last week at the Financial Markets!!!
Price Performance of Different Asset ClassMarket
remained volatile in
narrow range.
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The Week Ahead in the Financial Markets
Ministerial panel’s meet next Thursday, to take a call on fresh bidding norms for ultra mega power projects.
Cabinet’s meet next week to take up the issue of relaxing FDI norms.
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HOT TOPIC OF THE WEEK
Rupee Hits New LowAt 61.20 against
Dollar
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HISTORY REPEATS ITSELF
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In 1998 at the time of Asian crisis, Rupee witnessed sharp depreciation along with volatility.
At that time RBI targeted liquidity by hiking CRR by 200 bps and making refinance more expensive.
That measure worked, stamping out speculation against rupee.
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REER AT 20 YEAR LOWREER= Real Effective Exchange
Rate
In 1st Quarter 2013, INR made 20 years low on
REER basis
REER calculates INR value against 36 international currency
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RBI’S ACTION
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Size of Liquidity Adjustment facility capped at Rs. 75,000 crs.
Marginal Standing Facility and Bank rates hiked by 200 bps to 10.25%.
Announced Open Market Sales of G-secs for Rs. 12,000 crs.
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IMPACT
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On Debt Market
• Short term bond yields have increased by 150-200 bps
• 10 year G-sec yields increased by ~50 bps
• Cost of Borrowing will increase
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On Economy
• Tight liquidity and high cost of borrowing will result into delay in Investment cycle.
• Even these measures are for short term but if it continues for long term then it may hurt Economic growth.
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On Equity
• Any slowdown in economy will adversely affect equity market.
• Till date, FII have invested around Rs. 73,660 crs in Indian stocks and any serious damage on growth side may convert into outflow.
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If RBI’s measures are temporary then it will have minor negative impact on economic growth.
Any long term continuity of these measures will result to severe adverse impact on growth.
If current measures could not assist in controlling the rupee volatility then RBI may increase the rates.
Conclusion
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