INSUBCONTINENT EXCLUSIVE:
The domestic economy and markets danced to the tune of a falling rupee as well as soaring crude oil prices in the past two months.
But money
managers on Dalal Street say the worst for the currency and crude is over for now
As if on cue, crude oil has already entered bear market globally amid rising supplies and weakening demand outlook.
The Diwali Survey of
ETMarkets.com, in which 20 fund managers from top brokerages, mutual funds, insurers and private equity firms were polled, showed the
majority on Dalal Street feel the rupee may remain in the 70-73 range against the dollar till next Diwali
They see crude in the $65-70 a barrel range by the end of Samvat 2075.
In the worst case scenario, they see the rupee touching the 77-mark
against the dollar and crude oil rising to $85 a barrel level.
In the international markets, Brent crude prices rose 27 per cent since last
Diwali, only to slip nearly 18 per cent in the last week of the Samvat year
The rupee is down 12 per cent in this period.
The rupee hit a fresh low of 74.48 against the US dollar in October
In a double-whammy, Brent crude prices surpassed the $86 a barrel mark
The local currency was around 73-mark on November 6, while crude was around $73 per barrel.
RBI is actively intervening to curb volatility
in the currency and that is reflecting in depleting foreign exchange reserves
At the start of the year, India’s forex reserves stood at $411 billion, which has depleted fast to $394.50 billion at last count.
After a
major spike, crude prices have stabilised following comments from a Saudi minister, hinting at plans to increase supplies, if
needed.
Abhimanyu Sofat, Head of Research, IIFL Securities, said the rupee is likely to remain in the same range as it is today
However, crude may come below $70 a barrel if the global political situation improves.
AK Prabhakar, Head of Research, IDBI Capital Market,
sees the rupee in the 72-73 range against the dollar and crude at $75 a barrel by next Diwali.
However, Sahil Kapoor, Chief Market
Strategist, Edelweiss Investment Research, said the rupee shall continue to decline as capital outflows continue in order to chase higher
rates elsewhere as monetary tightening gains pace.
Overseas investors pulled out Rs 38,900 crore from Indian capital markets in October, the
steepest outflow in nearly two years, on rising crude oil prices, a depreciating rupee and worsening current account deficit
Navneet Damani, AVP-Commodity Research, MOFSL said selling by FIIs suggests they have not been too confident about investing in Indian
markets due to host of domestic and international factors as well as the general elections scheduled for early next year.
