Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the realty sector and auto sector witnessing maximum buying interest. Telecom stocks are trading on a negative note.
The BSE Sensex is trading up 134 points (up 0.4%) and the NSE Nifty is trading up 42 points (up 0.4%). The BSE Mid Cap index is trading up by 0.7%, while the BSE Small Cap index is trading up by 0.4%.
The rupee is trading at 68.88 to the US$.
In the news from Indian financial markets, as per the provisional data available with the BSE, foreign portfolio investors (FPIs) sold Rs 1.6 billion worth of domestic stocks on Thursday. Domestic Institutional Investors (DIIs), on the other hand, were the net sellers to the tune of Rs 2.9 billion.
As per a leading financial daily, about a dozen companies, including Tata Steel, Shriram Transport, Reliance, Idea Cellular, PNB Housing, Vedanta, and Indiabulls Real Estate, have announced plans to raise around Rs 750 billion in the past one month through non-convertible debentures (NCDs).
In the news from the currency markets, the rupee hit its all-time closing low of 68.95 against the US dollar yesterday. It fell by 21 paise following a panic demand for the US dollar. Losses were also seen on fears over a slowdown in the economy amid rising crude oil prices.
The rupee has been witnessing selling pressure against the US dollar since the start of this calendar year. It is currently the worst performing currency in Asia.
The recent weakness in the rupee versus the US dollar indicates further trouble for stock markets ahead. As seen from the below chart, when the Sensex corrected to its multi-year lows in March 2009, the rupee had also weakened by 21% in the past 9 months. Similarly, when Sensex hit an all-time high in January 2018, the rupee had been gradually strengthening over the past year.
Change in the Rupee and Sensex in the Past 10 Years
As Girish Shetty wrote in a recent edition of The 5 Minute WrapUp...
- Post January, the rupee has been on a constant decline versus the dollar.
Increase in US bond yields has made it attractive for foreign investors. This has resulted in capital outflows from the Indian market. Past history has shown that any further weakening of the rupee will adversely impact the market.
But for investors, is it a matter of concern? If you have a horizon of 10 or more years, it shouldn't. As we can see from the chart, despite the rupee weakening by over 60% in the past decade, Sensex has also been up in the same period.
In the news from the IPO space, Varroc Engineering made a decent debut on bourses today. The scrip of the company, which recently concluded its IPO subscription offer, got listed at Rs 1,032, about 6.7% premium to its issue price of Rs 967.
Varroc Engineering supplies auto parts to Jaguar Land Rover, Bentley, Audi and Harley Davidson. Besides, it supplies auto parts to giants such as Volkswagen, Ford, Honda and Bajaj Auto.
Founded in 1990 in Aurangabad, Varroc is an automotive component manufacturer and supplier of exterior lighting systems, power-trains, electrical and electronics, body and chassis parts to passenger cars and motorcycle segments worldwide.
Speaking of IPOs, the demand for IPO's had reached sky-high levels. A merit-based selection primarily including valuation, business, and management quality is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often than not.
Comments
Log in or sign up to join the conversation.