Fabulous Fortnight

The government has taken quick steps in the last fortnight to bring economy back on the growth track. With this there is positive sentiments spread among Investors and markets also have cheered after government putting an end to the policy paralysis. Broader Market has appreciated around 4.7 per cent and it seems that probably everything would be good in the coming days.

The rupee which saw just moving upwards has now changed its direction and is appreciating against dollar. In the past fortnight the rupee has appreciated approximately by 3.6 per cent against dollar. Also in case of other exchange rates rupee has shown strength, as it appreciated by 2.28, 2.57 and around 3 per cent against Pound, Euro and Yen. The following table shows the Rupee dollar movement over the last fortnight:

                             Source: RBI

The sharp appreciation of Rupee is after Markets expects inflow of foreign funds into India. To recollect again Government has given a green signal to long pending reforms measures. It has announced FDI in Multi-brand retail, Aviation and broad band. Further in the last week there were also media reports which hinted that it may also hike FDI cap in Insurance and Pension. It also had planned to divest four of the PSU’s which is a step which could help in maintaining our fiscal deficit. The above news had a good amount of foreign inflows during this fortnight on the streets taking the markets higher while helping the rupee to appreciate.

                              Source: SEBI

Further Brent Crude Prices have also come down from the levels of around USD 104 per barrel to USD 109 per barrel in last 15 days. Rupee depreciation coupled with softening of crude prices would also help our twin deficit (Current and Fiscal) to improve and be on the lower side. Further the latest media report suggests that Rupee could strengthen further if 53 mark is breached decisively.

All in all, a very positive fortnight for our economy. In last 15 days, we had broader market moving northwards, Rupee appreciating and more focused on growth front and on containing our twin deficit has spread optimism over the economy. We believe the next major trigger for the market is the September quarter numbers of India Inc which the company would start releasing in around next 10 to 12 days. We hope the numbers does not disappoint the streets and keep the optimism alive on the streets. We believe the impact of rupee appreciation could be positive to Oil& Gas sector while the same could be negative for Sectors like IT and Pharma.