Pre Open Thoughts: Currency Crumble!!!

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).