7/25 Gold, Rupee, US Dollar Forex updates

India’s main index snapped five sessions of gains to end 0.61 percent lower on Wednesday, as investors locked in some gains after a record-setting rally, but ITC Ltd and Bharti Airtel limited the downside.

The BSE 30-share index ended down 95.59 points at 15,699.33, with 23 of the components losing ground. It had hit a record high of 15,868.85 on Tuesday — its 14th record in 17 sessions.

But analysts said this could be just a temporary halt for the market, which has gained more than seven percent so far in July. “This is just a speed breaker,” said Sandeep Shenoy of PINC Research.

Neeraj Dewan, director at brokerage Quantum Securities said investor sentiment was impacted by weakness in global markets and expected the local market to stay positive, helped by strong liquidity.

“The market went up from its lows, which means that buying is still going on a selective basis.”

Shares in top tobacco maker ITC Ltd, which reports results on Friday, jumped 8.9 percent to Rs 165.85 after CLSA upgraded the stock to ‘buy’, saying cigarette volumes and earnings growth were likely to surprise on the upside. Fourth-ranked software exporter Satyam Computer fell 6.1 percent to Rs 486.90, after rising 5.4 percent in the previous session.

“People have a feeling that technology stocks will be under pressure for sometime. So whenever you see a rise, a fall will follow,” Dewan said. India’s export-driven software firms have been winning large orders from local and overseas clients, but a stronger rupee against the US dollar is eating into profits, analysts say.

Top software exporter Tata Consultancy shed 1.9 percent to Rs 1,149.05, but bellwether Infosys added 0.7 percent to Rs 1,989.95 after it said it would make an announcement after market hours. After the market closed, Infosys said it had signed a multi-year outsourcing contract with Royal Philips Electronics.

Shares in top state-run explorer Oil and Natural Gas Corp rose 2.1 percent to Rs 934.25 after it beat forecasts with a nearly 12 percent rise in quarterly profit. See Top mobile firm Bharti Airtel rose 1.6 percent to Rs 946.80, ahead of its quarterly results on Thursday.

The 50-share NSE index slid 0.69 percent to 4,588.70. It had hit a life high of 4,647.95 on Tuesday. In the broader market, losers led gainers 1,746 to 877 on volume of 315 million shares.
Rupee / US Dollar Forex Currency News,
t had to be a good day for the rupee right from the word go, because the dollar has had an extremely weak day globally. It is weak against all majors practically against the Yen, Euro and the pound particularly. Early morning it was a no-brainer to expect the dollar to take quite a badgering and the woes of the dollar-rupee was compounded by the fairly decent performance of the Indian equity markets especially in the early morning session. And whatever the cause of the equity markets, the amount of dollars coming into the system is not funny. It is almost as though the FIIs are marching into the country like a tidal wave.

And the bigger concern for the dollar has been the manner in which Indian companies especially exporters have been selling. The forward dollar crashed so sharply over the last three weeks which was something around Rs 1.50 or Rs 1.60 about 3 weeks ago whereas yesterday it had crashed all the way to Rs 0.45.

So when you are losing Re 1 in just three weeks, people were just coming in and selling dollars at every spike. So it was really dollar selling all the way but there was this one bastion of support coming from RBI. Solid support was seen coming from PSU banks, buying dollars. Some market estimates say that RBI could have bought something like USD 1 billion today. That was the kind of solid support they were giving the dollar.

Money markets had a huge ride in early morning trades on Monday. So it was profit-taking time today. Also, as you get closer to the credit policy, which is due next Tuesday, a week from now, people become wary and want to book their gains and that’s what you saw. But there can’t be too sharp a fall either for the bond markets because there is so much of cash in the system and if theRBI has indeed bought USD 1 billion, it has put in Rs 4000 crore into the system. With the call giving like a 0.25% and even less, banks have to push their money somewhere. So even if T-bills give you 5% and 6% you will see them coming in and buy. You can’t see bonds falling for a very long time.

Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
Gone are Grandpa's days when the rich stored their money in cloth sacks. An India that is creating a record number of millionaires per year is looking for better ways to stash rupees, and that has spawned a new tribe of managers wooing the rich with expertise to multiply wealth.

The number of US dollar millionaires in India recently breached the 100,000 mark, the second-fastest growth in the world after Singapore. The number of high-net-worth individuals (HNWIs) in



India grew 19.3% between 2004 and 2005, compared with the global average of 6.5%.

The millionaire population surge is attributed to a variety of factors, central of which is the unprecedented bull run of India's stock exchanges that has multiplied market capitalization or company share value worth. The Bombay Stock Exchange Index, for instance, is repeatedly cracking the ceiling, hitting a record 15,773.37 points this Monday, the highest ever, more than double the mark a decade ago.

Traditionally, India's wealth usually came from former maharajas, landlords, and the rural rich. The software boom in the 1990s was among the first to open the fortune gates to new entrants. Software giant Infosys itself has more than 2,000 millionaires among employees who hold stock given by the company, including the likes of Kannan, the chauffeur of founder and chief mentor N R Narayana Murthy.

Inevitably, multinational and local banks and financial firms smelled a market ripe for plucking in what the elite calls "private banking" and financial agencies call "wealth management".

Products are being rolled out rapidly for this market, with DSP Merrill Lynch last Friday launching its Trust Services for High Net Worth Individuals in northern India. Invitation to use the service needs the equivalent of a mere US$992,000, and Merrill Lynch chief trust officer Kevin Horrocks modestly hoped to haul in at least 1% of the conservatively estimated 100,000 millionaires in the country.

The new options for investing include art, overseas investments, real-estate venture funds, and a yacht or two (Mumbai is emerging as one of Asia's biggest yacht markets, with the second annual International Boat Show scheduled for next March).

Earlier, the favorite outlets for surplus wealth were gold, land, property, shares and mutual funds. Any professional investment expertise sought would come from chartered accountants, tax consultants or, more often, brokers.

"It is an extremely challenging task to break the traditional mindset and [persuade] HNWIs to embrace an asset-allocation methodology through a professional wealth manager," Sutapa Banerjee, senior vice president and head of Indian private banking at ABN Amro Bank, told the US media.

But the market inputs suggest that the market is being cracked. A relatively humble banking establishment, Centurion Bank of Punjab, reported a 64% rise in income from services such as wealth management.

To stand out from competition, wealth-management agencies are carving out niche areas, usually varying in the level of wealth their client needs to qualify for their attention. HDFC, one of India's largest banks, is targeting rich non-resident Indian investors largely based in the United States, Hong Kong, Singapore and the Middle East. Real-estate venture funds and REITs (real-estate investment trusts) are among other options expected to be increasingly popular.

Latest research from the PricewaterhouseCoopers 2007 Global Private Banking/Wealth Management Survey quotes chief executive officers confident that their assets under management will grow 30% annually. The survey says Asia-Pacific and eastern European markets for wealth management are bloating the fastest, as banks and organizations stampede to serve the newly wealthy.

Bruce Weatherill, global private banking/wealth management leader for PricewaterhouseCoopers, said it's time for strategic choices to be made and finite resources to be focused on supporting highly ambitious growth plans. "A particular strategic issue," he remarked in the report, "is how to respond to the fast emergence of wealth management in developing countries, which presents huge opportunities."

The wealth-management market outlook sees even rosier prospects after India loosens its regulatory regime and gradually moves toward full rupee convertibility that will increase outflow of investors to foreign markets.

At present, the regulatory Reserve Bank of India allows Indians to remit up to $50,000 overseas a year; that limit will be lifted to $200,000 by 2009. Foreign banks are also expected to enjoy a more level playing field in India by 2009, giving the wealth-management market wider dimensions and competition.

Wealth-management experts say the market is already developing a wide base. Current estimates reckon India now has about 20 million urban households that earn $5,000-$10,000 a year and 7 million households earning between $10,000 and $100,000, and products are being developed to fit these less wealthy brackets.

An India rapidly breeding millionaires also has 47% of its children below age three suffering malnourishment, according to the United Nations Children's Fund, and wise private banking managers and their millionaire clients might factor such sobering realizations into their wealth-utilization strategies.
U.S. gold futures rallied to a two-month high in heavy trade Friday, capping a week of solid gains fueled by renewed fund buying and as investors sharply increased holdings of bullion held by gold exchange-traded funds (ETF).

Analysts said that gold was poised to retest the psychological $700 level in the near-term because of a combination of bullish factors including a weakening dollar, firm energy prices and improving jewelry demand.

Most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was up $6.60, or 1 percent, at $684.70 an ounce, dealing between $675.80 and $687.60 -- which marked its loftiest level since May 10.

Zachary Oxman, senior trader at Wisdom Financial in Newport Beach, California, said that gold's fundamentals were improving, citing renewed inflows by funds and a strengthening Indian rupee, which boosts jewelry demand from top gold consumer India.
"In the intermediate term, it looks like the market is a little overbought, but today's rally pushes through that argument and put it more to a long-term trend towards $700," Oxman said.

Gold has attempted several times to break above the $700-level and retest the 26-year peak at $730 set in May 2006, but so far has failed this year.

Joseph Guzzardi at Sabin Commodities said from the COMEX floor that the falling dollar and stronger energy prices had kept the precious metals market up most of this week.

"Some fund buying is coming back in here," he said Guzzardi also said that gold futures might be a little overdone, but he expected prices could still go slightly higher in the near term.

COMEX estimated final volume at a busy 122,692 lots, and gold options at 13,447. Turnover at Chicago Board of Trade's electronic 100-oz gold futures was 27,329 lots at 2:21 p.m. EDT