Rupee hits 17-month low in volatile trading

Rupee hits 17-month low in volatile trading
Lack of participation weighs on markets

The rupee fell to its lowest in 17 months on Monday, hit by a weak stock market and some lumpy orders in a holiday-thinned market that was also factoring in some recent dollar strength. The partially convertible rupee ended at 43.59/60 per dollar, recovering slightly from a intraday low of 43.70, its lowest level since March 29, 2007. The rupee fell 1.33 percent from Thursday's close of 43.01/02, its biggest percentage fall in a year. It has fallen by 3.5 percent in the last five sessions and is down 9.6 percent in 2008. It rose more than 12 percent in 2007.

Markets were closed on Friday will shut again on Tuesday for local holidays, which meant many trading rooms were thinly staffed. Trade was volatile, with the rupee trading a 43.05-43.70 band, and traders said there was heavy dollar buying by a large manufacturing company around 43.50 per dollar. "This sharp fall looks like some stop-losses have got triggered and even offshore markets are pointing to a weaker rupee," said R N Hirve, chief dealer at Central Bank of India.

One-month offshore non-deliverable forward contracts were quoting at 43.81/86 per dollar. The dollar hit a six-month high against the euro on Monday, although its surrendered the gains later in the day. The euro has fallen nearly six percent against the dollar in two weeks on concerns of an economic slowdown. Speculation the central bank may step in to stop the rupee's fall proved unfounded.

"There was some talk it may intervene around the 43.50 per dollar, but once that level broke conclusively, it fell like a stone," said a dealer at a state-run bank. Data on Thursday showed the central bank sold $7 billion in intervention in June, the biggest single-month dollar sales since it began publishing the data in April 1995. A weak finish on the stock market also weighed on sentiment. The benchmark index ended down 0.5 percent, a fourth successive fall, and is down 28 percent for the year. Foreigners sold about $250 million of stocks last week, taking their net sales for the year to $6.8 billion. They bought a record $17.4 billion in 2007.


Source: Economic Times.com

Top Headlines Today

Headlines

Bharti Airtel crosses 75 mn subscriber base
TRAI turns the heat on GSM cos for not linking to RCOM
Analysts'Picks: Voltas, Corporation Bank, Sterlite Ind, India Cements, IRB Infra
Sical logistics to invest Rs 1,700 cr
PSU city gas cos oppose RIL entry

Nuclear Power short-lists 4 suppliers for reactors
The shape of Indian talent after 61 years of Independence
Reliance Big, Soros deal stuck over valuation
Maruti to open 110 new driving schools; 10 research institutes
L&T eyes 25 pc revenue from international business

India Inc's investment plans rise to $244 bn
India Inc's investment plans surge to Rs 10 trillion: Assocham
India is among "big brothers" of WTO: Pascal Lamy
'Indian stocks only positive performer among BRIC in Aug'
Gold may slip below Rs 10,500 by end of Sept

`Institutions will have to pay 100% for IPOs soon`
250 sugar mills under scanner for holding back stocks
For 17,500 right people, ICICI scans 7.5 lakh resumes: Kamath
India expects exemption from NSG without any change to draft
Oil rises to $114 on storm threat

Source: ET,BL.BS,UTVi.

Sensex likely to enter bull orbit only after crossing 15300

Sensex likely to enter bull orbit only after crossing 15300

18 Aug, 2008, 0301 hrs IST
It has been a decent run for the market with more leaps than hops, in the past few weeks. Some of that momentum has eased last week. At this juncture, the Sensex is trading below the 15000-level. Looking at the market from here on, the 14900-mark — crucial for the continuation of the current trend — has been breached. This may revive forgotten pains of wealth destruction for participants seen in the past six months.

Technically speaking, as per the Elliot wave, the current fall that started from 21207 (6357) has shown a Falling Wedge’ Structure. In this structure as seen in the chart, the A-B-C formation of the bear trend got completed. After this, the Sensex formed a bottom of 12514 mid-July which is also near the 50% retracement level of the past five years’ uptrend (2904-21207) of 12300 (3700). After this significant bottom, the index witnessed a swift rally of 3000 points in just 21 trading sessions, raising hopes of a further upmove.

Major contributors to this rally were shares of banks and capital goods companies. However, we have broken this momentum and this break may play just the decisive role in inducing further movements. Here is where the level of 14900 is significant. First of all, looking at the current upward movement closely, one would see a higher-top, higher-bottom pattern formation. For this pattern to remain intact, the index has to close above 14900. Secondly, if we look at the trend line joining bottoms that were formed along the way by the Sensex in this past rally, the level of 15000 is a threshold for its way up.

Thus, a closing below 14900 is a decisive breach of this trend line. The breach downward signals the termination of this trend and beginning of a corrective trend. Also, the Relative Strength Index Oscillators on daily charts is in an overbought territory and is turning downward. This indicates fatigue in the market thereby inducing some more profit-booking. After consecutive four positive weekly closings, the Sensex witnessed a decline of 444 points, showing a bearish candle on weekly charts thereby confirming the probable trend reversal.

What next? After this development, no prizes for guessing the direction of the market. If we have to put a tentative number to the next level, we may look at one of the trend reversal properties, according to which more often than not key retracement level of 50% of the preceding uptrend is tested. If we were to trace the current rally for the Sensex of over 3000 points from 12514 to 15580, the 50% retracement level comes near 14000.

There could be good buying support at this (14000) level. This level has another significance as well since the 34 DMA (daily moving average) is also placed near this level. The odds are against a further rise on the back of this weekly close, but if the market does manage to escape out of this bear momentum, the bounceback will find congestion levels, placed at 15000 and subsequently at 15300.

The Sensex needs to sustain above 15000 and decisively breach 15300 to enter the bull orbit again. If the market were to test lower levels once again, shares from the capital goods, auto and banking sectors appear to be good bets. Bharat Heavy Electricals and Bharat Electronics among capital goods shares, Maruti and Hero Honda in the automobile sector, and ICICI Bank and Jammu and Kashmir Bank in the banking sector look good on the charts.

Other Investor Guide Articles from ET

Analysts'Pick: IRB Infrastructure18 Aug, 2008, 0635 hrs IST
Lehman Brothers initiates coverage on IRB Infrastructure Developers with an ‘overweight’ rating and a March ’09 price target of Rs 195.

Analysts'Pick: Indian Cements 18 Aug, 2008, 0632 hrs IST
JM FINANCIAL recommends ‘hold’ rating on India Cements (ICL) and values the company at a target enterprise value/tonne of $100 to arrive at its June ’09 target price of Rs 168.

Analysts'Pick: Sterlite Industries 18 Aug, 2008, 0631 hrs IST
Merrill Lynch remains ‘neutral’ on Sterlite Industries due to weak zinc outlook.

Analysts'Pick: Corporation bank, 18 Aug, 2008, 0629 hrs IST
Indiabulls Securities reaffirms its ‘buy’ rating on Corporation Bank with a target price of Rs 335, which is 21% more than its current market price.

Analysts'Pick: Voltas 18 Aug, 2008, 0627 hrs IST
Citigroup rates Voltas as ‘sell/medium risk’ with a target price of Rs 121.

Refinery sector faces crunch18 Aug, 2008, 0553 hrs IST, Ramkrishna Kashelkar
The slowing demand for petro products globally and a glut in upcoming refining capacity in the country do not bode well for the refinery sector.

Investment philosophy;stocks to buy and hold on 18 Aug, 2008, 0537 hrs IST
ETIG dug deep into the past five years’ data and ferreted out stocks, which although cheap, are best avoided.

Comparison of two FMCG majors; HUL & ITC 18 Aug, 2008, 0517 hrs IST, Kiran Kabtta
ETIG presents comparison between two FMCG majors, HUL and ITC.

Tulip keen on improving in highmargin biz 18 Aug, 2008, 0456 hrs IST, ranjit shinde
Tulip Telecom continues to look attractive at current valuations, given its future growth prospects.

Insecticides is a good long-term bet 18 Aug, 2008, 0450 hrs IST, Amit Jain
Insecticides India is a good long-term bet, as it promises strong topline & profits and has limited downside risks.

Elder Pharma an attractive pick for investors 18 Aug, 2008, 0442 hrs IST, Kiran Kabtta
Robust healthcare sector has accelerated growth of FMHG in India and Elder Pharma, which has an eclectic bunch of offerings, is cashing in on good times.

Economic slowdown hits profitability of domestic banks 18 Aug, 2008, 0432 hrs IST, karan sehgal
The current economic slowdown has hit profitability of domestic banks. In such a challenging scenario,Axis Bank, HDFC Bank & Bank of India are the safest bets.

Global sugar supplies to tighten 18 Aug, 2008, 0407 hrs IST
World is sitting on huge stockpile of sugar, but global supply outlook will tighten into next year due to rain-induced crop problems in Brazil and falling output in India, auguring for higher prices.

The twin trap; Market currently under-prepared or under-hedged! 18 Aug, 2008, 0336 hrs IST, Shakit Patra
Last week, Nifty posted its first weekly loss after five consecutive weeks of gains, rise in volatility that should have ideally accompanied it didn’t materialise.

Source:Economic Times.