Rupee may fall to 65 by December, Sensex expected to surprise on the upside

MUMBAI: The gloom surrounding the Indian economy may deepen in the next three months with the rupee expected to weaken and inflation projected to stay high, an ET poll of top fund managers and brokers shows.

The rupee may possibly touch 65 to the US dollar by December while inflation is expected to stay at elevated levels of 9% (retail) and 6% (wholesale). The US Federal Reserve could start slowing its bond purchases by the end of the year, a majority of participants said, and not September as is widely believed.

The Sensex is expected to hold its current position and may even surprise on the upside, the poll reveals.

Nearly 45% of the fund managers and brokers expect the rupee to trade between 62 and 65 to the dollar this year while 33% said it will be range-bound between 60 and 62.

Sensex seen at 18,000-19,000

The rupee, Asia's worst-performing currency so far this year, ended Monday down more than 2% to 63.13 to the dollar. It has fallen 9.83% since June.

About 40% of the participants said the Sensex will trade at between 18,000 points and 19,000 points by December while 20% were optimistic about the index crossing 20,000. The Sensex closed Monday down 1.56%.

It has fallen 7.35% since June this year. "The Indian economy is under pressure, not only due to fears of flight of capital ahead of the US Fed's expected move of QE tapering, but also due to the negative domestic economic fundamentals that are driving the rupee weaker," said Dinesh Thakkar, CMD of Angel Broking.

Fifteen fund managers and brokers participated in the poll conducted over telephone on Monday.

"The government measures so far to stabilise the currency are clearly not working. Tightening the liquidity has affected India Inc in terms of higher interest costs and lower growth," said Andrew Holland, CEO, Ambit Capital. "Countries with high current account deficits have got impacted."

All participants said the government needs to do more on the policy front while a majority believe that elections will be held as per schedule. Two-thirds of the participants suggested that investors should buy in a staggered manner while the rest feel they should wait for a few more weeks for more corrections. Nearly 90% of the participants said they had lost faith in the UPA government.
resource:http://economictimes.indiatimes.com/markets/stocks/market-news/rupee-may-fall-to-65-by-december-sensex-expected-to-surprise-on-the-upside-et-poll/articleshow/21924010.cms

Read more »

Action against ICICI Bank, HDFC Bank, Axis on basis of RBI report: Finmin

The government today said action would be taken against ICICI Bank, HDFC Bank and Axis Bank on the basis of an RBI audit report which has detected certain "aberrations", a month after the private banks were accused of money laundering by an online news portal.
"An audit report has come and now the banks would probably be asked for their versions...We don't need to recommend anything; we discussed the issue and everybody will do whatever one is supposed to do after that. The RBI would be doing what they are required to do," Banking Secretary Rajiv Takru told reporters outside the Mint Road office of RBI.
"I think it would be safe to say that there are actionable points where RBI would need to take some action and consequently government would also need to address them," he said.
Last week, Reserve Bank Deputy Governor H R Khan had said the central bank is initiating action against these banks.
"Actions are on the way. Scrutiny has been done, actions is being taken both in respect of systemic level and at the individual banks," he had said.
"Actions are being initiated both at the system level and the individual bank level," he had said.
The banking secretary said that he has received RBI's interim audit report on the allegations levelled in the sting operation by news portal Cobrapost.
However, Takru said he was not at the RBI to recommend specific actions in the regard.
The country's three largest private banks -- ICICI bank, HDFC Bank and Axis Bank -- were last month accused by Cobrapost of indulging in money laundering activities.
Takru said RBI audit report has found certain "aberrations" at ICICI Bank, HDFC Bank and Axis Bank.
"There is no risk of systemic failure. There are certain aberrations which we have discovered in the audit report.
resource:http://www.indianexpress.com/news/action-against-icici-bank-hdfc-bank-axis-on-basis-of-rbi-report-finmin/1104440/

Read more »