Pre Open Thoughts: Currency Crumble!!!
Ø A weak currency is the
sign of a weak economy, and a weak economy leads to a weak nation. A
steep fall in the rupee since February to an extent reflects the rapid
deterioration in India’s economic fortunes. A big problem is that policymakers
have little room to arrest the economic slowdown. The Government is also
hamstrung due to a swelling fiscal deficit. The eurozone credit crisis and
anemic US economy have made matters worse. Downside risks for the Indian and
global economy still persist. Therefore, one cannot rule out further drop in
equities and currencies. There is only one option: endure the pain and avoid
misadventures.
Ø The start is likely to
be positive owing to overseas markets but it’s likely to be volatile. Whether the early pop will sustain
remains to be seen.
Ø Traders will be eyeing
the rupee movement as it has touched a fresh all time low, though finance
minister Pranab Mukherjee has expressed concern over the sharp fall in rupee
and said it was linked to the Eurozone uncertainty and Centre was keeping a
close watch on the situation.
Ø Meanwhile, the
somberness may continue as Planning Commission deputy chairman Montek Singh
Ahluwalia has said that ailing rupee and high inflation would make it difficult
for India to achieve 7.5 per cent economic growth during the current financial
year.
Ø However, amidst all
these dark clouds there emerged one silver lining –that oil has come off a bit.
Ø Softer global conditions, weak investor and business confidence,
government paralysis, and tight monetary conditions are all weighing on demand
back home.
Ø The Nifty has violated a key trough of 4900. We remain cautious in the
near term as long as the Nifty trades below 4900, which corresponds to a
bearish range.
Results Today:
Tata
Power Co. group, Power Finance Corp, Wockhardt, Container Corp. of India, Opto
Circuits, Opto Circuits ,GTL, Talwalkars Better Value Fitness.
Global Data Watch:
Bank of
Japan Monetary Policy Meeting Minutes (May 22), China Conference Board Leading
Economic Index, UK Consumer Price Index (Apr), UK Core Consumer Price Index (Apr),
UK DCLG House Price Index (Mar), UK Public Sector Net Borrowing (Apr), UK
Retail Price Index (Apr), US Fed’s Lockhart speech, EU Consumer Confidence
(May), US Existing Home Sales (Apr), US Existing Home Sales Change (Apr), US
Richmond Fed Manufacturing Index (May), Japan Merchandise Trade Balance Total
(Apr), Japan Adjusted Merchandise Trade Balance (Apr), Japan Imports and
Exports (Apr).
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