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

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