Knowledge plus series i 170813
11
From Research Desk VALUE PLUS - The Family Office KNOWLEDGE PLUS For Wealth Plus 17 th August - 2013
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Dear Sir, In this issue, we would be discussing on "Why measures taken to control Rupee Volatility are not working?, Which gives you idea about consolidate view on action taken by authorities as well reason to fail such action. Kindly download details from the following link : http://www.youtube.com/watch?v=LPIDnqg2JIQ "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. Thanks & Regards
Transcript of Knowledge plus series i 170813
FromResearch Desk
VALUE PLUS - The Family OfficeKNOWLEDGE PLUSFor Wealth
Plus
17th August - 2013
Hot Topic of the Week
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Last week at the Financial Markets!!!
SENSEX fell by 191 points (-1.02%) and closed to 18598 at end of the week.
FII’s remained net buyers in equity segment with inflow of Rs. 447.90 crore while they stood as net sellers in the debt segment with a net outflow of Rs 466.60 crore.
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News Impact
• RBI announced fresh measures by tightening overseas investment limits for Indian companies and individuals.
• Process of Merger and Acquisition by Indian companies will be slow
• Demand for $ will reduced• FII’s may take exit from their
investments considering this as a capital control measurement
• Rupee hits all time low to 62. • All import items will be costlier• Current account deficit will widen• Textile, Diamond, IT sectors will be
beneficiaries• Exporters will be more competitive in
the international markets
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Price Performance of Different Asset ClassHigh Volatility was seen in all financial
markets .
High Volatility was seen in all financial
markets .
Last week at the Financial Markets!!!
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Government may impose duty on imports of solar equipments.
NSEL’s settlement will start on 20th August, 2013.
Next Week in the Financial Markets...?
Hot Topic of the Week
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1. Hiked import duty on Gold Government increased import duty on Gold from 8% to 10%
We believe this measure has worked to some extent. But positive impact was nullified by higher international gold and crude price.
Brent Crude Price
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RBI’s intervened in Forex market by selling dollar from PSU banks
RBI took action on currency derivative market to curb speculative positions
2. Intervention in Forex Market
We believe Demand and Supply was the major factor behind rupee depreciation instead of speculation.
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3. Change In Interest Rate Policy
10 year G-Sec -India -US
RBI raised cost of borrowing of banks by 2%Increase in daily limit of Cash reserves ratio of the bank
Hike in US G-Sec yields made India's G-sec yield unattractive. So, FII’s out flow in debt market may continue.
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4. Increase in FDI limits and liberalisation of ECB guidelines• Government increased FDI limits in sectors like telecom, insurance & defense.
• Subsidiaries of MNC’s have been allowed to raise money from their parent companies.
• The limit of overseas direct investment for companies (under automatic route) reduced from 400% to 100% of their net worth.
• Reduced the limit for remittance for individuals from $2,00,000 to $75,000
We believe this measure will work in the long run. So, it is not able to control short term volatility.High interest rates, declining business & consumer confidence as well as unstable political environment will resist FDI to invest in India.
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Research Desk
VALUE PLUS - The Family Office
Office: (0265 -2324600,6629800)Email: [email protected]: www.valueplusinv.com
