Indian Rupee and Sensex Index after fraud

Indian Rupee and Indian Sensex Stock Market present us with an incredible long term buying opportunity. Indian Rupee Exchange Rate Forex trade will be open to the worldwide public. This will open up the books on many Indian companies. Exposing little or nothing, this renewed confidence will drive the Indian Markets and Indian Rupee higher as we move forward.

Indian companies exposed accounting door day stock plunge 80 percent

JP Morgan Chase, said the incident to the Indian stock market provides an attractive “buy”

Securities Times reporter Wu Ming

By India’s fourth largest software service providers Satyam Software Technologies Ltd. (Satyam Computer Services Ltd) Wednesday revealed a huge accounting fraud case, the company’s share price in a single day plunge nearly 80 percent, to close at 39.95 rupees, the company’s value 7 billion U.S. dollars from the “evaporation” to only 550 million U.S. dollars. Dragged down by the day, India’s Bombay Stock Exchange benchmark Sensex index fell 7.3 percent. This news business in India triggered a mighty uproar, investors have questioned the performance of listed companies in India authenticity.

Satyam Technology Co., Ltd., founder and chairman Raja announced his resignation Wednesday and acknowledged that the company’s financial performance on important fraud, including making more than 10 billion U.S. dollars cash balance, but also exaggerated the company’s profits over the past few years and Claims on the scale of the company’s liabilities, such as false. The company listed in New York American Depositary Receipt (ADR) has also been declared an indefinite cessation of the New York Stock Exchange trading.

Coincidentally, “Satyam” in Sanskrit is “true” means, many analysts to have Satyam’s accounting fraud case and Mr Adolf fraud case mentioned in the same breath. India’s main market regulator Securities and Exchange Commission Chairman CB Bhave said that the accounting fraud case Satyam the seriousness of the shocking. India has been the Securities and Exchange Commission yesterday ordered a Satyam company to conduct an investigation. Accounting fraud case deal may also lead to a number of investors filed lawsuits against the company in addition to the board of directors and board of supervisors, we should also be charged with responsibility for auditing the company’s accounting firm PricewaterhouseCoopers.

In order to customer’s emotional stability, a Satyam company’s top executives yesterday that it had been informed of all corporate accounting scandals affected customers, Satyam’s business as usual. Nissan Motor and Sony Corporation spokesman yesterday confirmed the company with Satyam for cooperation exist, but have received assurance company Satyam.

As a family business in India, accounting fraud case Satyam also investors in the Indian family business in the corporate culture on the existence of risk. India has long been a family business to investors in order to nepotism, poor management, lack of transparency and other issues. 30 stock market in Mumbai stock index, over half of the enterprises are controlled by the family. At the same time, the incident also provide investors with a number of emerging markets corporate governance and regulatory systems uneasy.

Although Satyam due to “accounting doors” lead to stock prices, but the Indian stock market or be affirmed. Yesterday, JP Morgan Chase to the Indian stock market rating from “underweight” to “neutral” level, and said that “accounting door” to the Indian stock market provides an attractive “buy.” JP Morgan also said that accounting scandals Satyam is only the issue of individual companies, on the whole the impact of the Indian stock market will be limited.

Rupee / US Dollar / Forex Currency News, Gold prices India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee. Silver us dollar rupee
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Rupee / Dollar Exchange and Gold price update

Indian rupee regained its upper hand to dollar by 12 paise to 42.78 against the greenback mainly on heavy dollar selling by exporters on Friday.

The rupee-resumed firm at 42.82/83 a dollar from its overnight closes of 42.90/91 a dollar and later improved to 42.78/79 a dollar in late morning deals.

Rupee drew support from reports the central bank may consider increasing the Cash Reserve Ratio or short-term interest rate to contain the rising inflation.

The Rupee Dollar - a technical perspective

After remaining below Rs. 40 levels for about six months (from Sept 07 to Feb 08), the Dollar/ Rupee rate touched Rs 40.70 and has since retraced 61.80% of its move ( 61.80% is a Fibonacci retracement level)

Also after it took support at Rs 39 thrice during the period Sept 07 to Feb 08 , the technical pattern visible was of a 'rounding bottom'- which is a reversal pattern. In this case it reverses the down trend in the Dollar against the rupee.

The current technical structure is in favor of the dollar rising further against the rupee ( i.e. rupee depreciating further).

My technical target over a period of the next few months would be Rs 41.60-41.90 per dollar.

The current price of dollar is Rs 40.02 and I expect the up move to restart once it breaks the resistance level of Rs 40.15 in coming days. Sensex stock index.

Probably those of you investing in stocks can take a cue from this and dig out stocks which can benefit from a depreciation in the Rupee!!

Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

The rupee failed to hold its overnight level in relation to dollar on the interbank market on Tuesday, losing 35 paisa for buying and selling at 67.25 and 67.35, currency experts said. The rupee resisted sharp decline versus the dollar due to smooth supply of the US currency.

Besides, it is expected that the rupee may lose more ground following persistent uncertainties on the political and economic sectors, they added. In the second session, the yen rose after a report that US investment bank Lehman Brothers may raise new capital, stoking worries about more fallout from the global credit crisis and prompting investors to avoid risky currency bets. The Wall Street Journal reported on Tuesday that US investment bank Lehman Brothers may raise $3 billion to $4 billion in new capital, suggesting the firm could post its first quarterly loss since going public.

OPEN MARKET RATES: The rupee gave up its firmness in relation to dollar, falling 40 paisa for buying and selling at 67.80 and 67.90, they said. The rupee also continued its weakness versus to euro, losing 69 paisas for buying and selling at 105.20 and 105.30, they said.

Rupee back on the rise against the US Dollar... Gold Skyrockets!!

Rupee on Tuesday appreciated against the U.S. dollar and closed at a five-week high of 40.56/57 driven by expectations of strong capital inflows and weak dollar overseas.

The interbank foreign exchange market also witnessed exporters’ dollar selling at the current level in fairly active trading. The rupee moved in a range of 40.54 and 40.64 after resuming firm at 40.55/56 a dollar against Monday’s close of 40.67/68.

Traders expected heavy inflows through the forthcoming initial public offer by a government-owned Power Grid Corporation, which opened on September 10, forex dealers said.
IT IS truly sad to watch the plight of technology stocks today. How the mighty have fallen. For people who have seen the power of this sector in the heydays of the tech bubble, it is difficult to digest the complete apathy with which they are treated today by investors.
They have become pariahs. Just for a day or two, when the ECB restrictions came in and the rupee darted back to 41 to the dollar, it looked like their pain may be nearing an end. How short-lived that relief has been. At the first sign of strength in the rupee, these stocks have plunged again.
To be sure, not everyone is bearish on IT stocks. A lot of institutional investors are still holding on faithfully to their Infosys and Satyams. It may appear surprising but most of the brokerage (sell side) analysts are actually very bullish on the sector. Many of them still have targets of 2,500-2,700 on Infosys and 1,500 on TCS. Sure, such calls have been horribly wrong for the last 6 months but they haven't changed their minds yet.
Investors from the buy side though have been far more circumspect, a fact reflected in the price performance of the sector. The jury is still out on whether a long-term derating of the sector is underway and analysts are merely in denial or this is a temporary mispricing by the market, which will get corrected.
The arguments for and against the sector i.e. rupee, US economic conditions etc. are well known so I won't dwell on them. My sense though is that the October quarter is crucial for the sector. It is traditionally the strongest quarter for IT companies and the rupee too has been relatively stable. If Infosys comes out with a very strong set of numbers and a very bold, confident assertion that things are alright, we may at least witness a meaningful pullback. If that doesn't come through, one fears for IT investors. Even patient investors may then throw in the towel and the consequent pain could be even more wrenching.
The spot rupee opened stronger at 40.61/62 against its previous close of 40.66, propelled by inflows towards the IPO of Power Grid Corporation and the bond issue of Power Finance Corporation, said dealers. Foreign and private sector banks were selling dollars, which saw the rupee reaching a high of 40.54/55 before ending the day at 40.56/57 to a dollar. Dealers said that at every upside of the rupee-dollar exchange rate, oil companies were seen buying dollars for oil payments . “If oil companies were not buying, the spot rupee could have touched 40.50 to a dollar, “ said a dealer.

The annualised premium for booking forward dollars inched up higher and closed for six-month and one-year dollars at 1.62 per cent and 1.74 per cent against 1.29 per cent and 1.40 per cent on Tuesday respectively. The firming up of the annualised premiums is attributed to the perceived tightness in rupee liquidity.

Money: Liquidity stays comfortable

Liquidity remained comfortable but the market was apprehending a tightness after the advance tax outflows. According to the dealers, the RBI accepted around Rs 22,000 crore from the market against Rs 27,000 core on Monday.

Call, the rates at which banks lend and borrow for their daily fund requirement, closed around 6.05 per cent. The funding rates in the collateralised lending and borrowing market (CLBO) also remained around 6 per cent and marginally came down below 6 per cent to 5.95 per cent during the day. NamesakeDomains.com

As against daily volumes of Rs 19,000-20,000 crore , the CLBO market clocked transactions of only Rs 12,000 crore.

G-sec: Prices fall

There are couple of factors that bogged down the sentiment in the government securities market. Crude prices went up to a high of $78 a barrel and the expected advance tax outflows played spoilsport, said a dealer. Going by the decline in the amount of surplus liquidity parked under the reverse repo route, the market is nervous, he added.

OIS and corporate bonds: Advance tax blues

The interest rates on the short end of the maturity went up sharply by 10-15 basis points. There was cautious trading in the secondary market. In the long tenure category, investors are preferring to wait for newer issuances at higher rates. In the short term, mutual funds are facing redemption from corporate clients and banks, which have to get prepared for advance tax payments.

The three-year segment has witnessed yields moving up from 7.75 per cent to 8 per cent, followed by nine-month where yields have gone up from 8.50 per cent to 8.65 per cent. Similarly, the one-year segment is offering certificates of deposits and commercial papers at 8.95 per cent, which was 8.75 per cent on Monday.

Global markets: Dollar loses ground

Dollar lost to all major currencies following the weak non-farm payroll data and expectations of rate cut in the forthcoming interest rate policy meeting of the federal reserve . GBP and euro figured at $ 2.0333 ( $ 2.0320) and $1.3826 ( $ 1.38) .

Yen was at $113.82 ( $ 113.55)

Sensex closed on Wednesday, Indian Rupee quite

YAHOO FINANCE POSTS RUPEE.US POSTING

The Indian rupee, now partially convertible only on the current account, is set to move towards fuller capital account convertibility in a ‘gradual’ and ‘calibrated’ manner.

Announcing this in the Rajya Sabha on Tuesday in a written reply, Finance Minister P. Chidambaram said: “The movement toward fuller convertibility of [the] rupee will necessarily have to be gradual, sequenced and calibrated to the overall macro-economic situation and emerging needs of the economy.”

Mr. Chidambaram was replying to a question by a member on whether the government would expedite implementation of the scheme of rupee-dollar convertibility.

The Indian currency is now convertible only in specific current account transactions such as foreign exchange requirements for overseas travel or education purposes abroad. For investments overseas and acquisition of assets abroad, prior approval of the Reserve Bank of India (RBI) is necessary as such deals are classified as capital account transactions. On fuller convertibility so as to include capital account transactions, prior approval of the RBI would not be deemed as necessary.

Market intervention

Asked whether the Government and the central bank were pumping in huge amounts for the purchase of U.S. dollars merely to control the appreciation of the rupee, Mr. Chidambaram pointed out that the excess volatility in foreign exchange markets was being reined in through currency market intervention, as and when deemed necessary.

This, he said, was being followed up by liquidity sterilisation through issuance of treasury bills and dated securities under the market stabilisaton scheme (MSS).

“The RBI has been sterilizing the liquidity impact of such foreign exchange purchases, placing emphasis on price stability and anchoring inflation expectations,” he said.

The Finance Minister pointed out that the overall approach to management of the country’s foreign exchange reserves took into account the change in composition of the balance of payments along with the ‘liquidity risks’ associated with different types of fund flows and other requirements.

The members were also told that the appreciation of the rupee was higher in the fiscal at 8.9 per cent in July over March.

The Indian currency has been appreciating on a monthly basis against the U.S. dollar from September 2006 onwards.
Rupee / US Dollar Forex Currency News
India’s Sensitive Index fell yesterday. Housing Development Finance Corp (HDFC), the nation’s second-biggest mortgage lender, declined on concern losses tied to US subprime investments will spread, damping growth in the world’s largest economy.
The Bombay Stock Exchange’s Sensex fell 16.30 points, or 0.1%, to 15,000.91. It earlier rose as much as 0.4%. Sixteen stocks declined while 14 advanced in the index. The S&P/CNX Nifty Index on the National Stock Exchange declined 3.45, or 0.1%, to 4370.20.
“Markets will remain weak until more clarity emerges on the extent of the subprime crisis,” said RK Gupta, who manages the equivalent of $86mn of stocks at Credit Capital Asset Management in New Delhi. Oil & Natural Gas Corp (ONGC), the country’s largest oil producer, gained after crude prices climbed.
HDFC fell Rs42.3, or 2.1%, to Rs1,941.3. Bharat Heavy Electricals, the country’s largest power equipment maker, slid Rs23.4, or 1.4%, to Rs1,687. ONGC added Rs10.75, or 1.3%, to Rs853.95.
Overseas investors sold a net Rs4.08bn ($101mn) of Indian equities on August 10, according to the latest figures obtained from the Securities and Exchange Board of India’s website.
The rupee fell to the lowest in more than a month on speculation importers stepped up dollar purchases to guard against a further decline in the currency.
Losses in the rupee make it more expensive for importers such as Indian Oil Corp and Reliance Industries to raise the foreign exchange needed to pay for goods.
The rupee fell 0.3% to 40.76 against the dollar at the 5pm close in Mumbai
Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.Indian financial markets are closed on Wednesday for the Independence Day holiday. Trading resumes on Thursday.
On Tuesday, the benchmark 30-share index ended down 0.11 percent, or 16.30 points, at 15,000.91. The index is up nearly 9 percent on the year, but is 5.5 percent below a record high of 15,868.85 hit on July 24.
The cataclysmic events of last Thursday and Friday in Europe and the US took their inevitable toll of Indian markets. The Sensex fell below 15,000 and the rupee dropped past 40.60 levels against the dollar. But, in a twist to the US and the European bond markets, yields on G-Secs rose to nearly eight per cent.

There was some slippage in industrial production in June, although on a year-on-year basis for the June quarter, the fall was marginal. But there is no doubting the slowdown of the economy. Non-food bank credit is climbing after a negative first quarter, but this is likely inventory financing. Anecdotal reports do not speak of great buoyancy in new investments, which is not surprising, given the recent decline in business confidence. Thus, the increase in the MSS bonds issuing limits need set off no alarm bells on interest rates.

Where do we stand? Will the domestic economy sustain a US slowdown, is the key question.

The growth forces in recent times have, in no small measure, been asset prices, fuelled largely by foreign portfolio investment chasing the India growth story. Increased global risk aversion will affect emerging market flows. The weakening of this engine has negative implications for the stock market and, by extension, the economy, because the ‘wealth effect’ of asset price inflation was a major driver of household spending which, in turn, catalysed the cap ex boom.

The imminent increase in petroleum product prices is a dampener as well. But, agriculture, given the satisfactory rains, will be no source of worry.

The external economy, it need hardly be said, will be the first casualty of the US sub-performance.

A silver lining is the good prospect of a considerable fall in global crude prices as American growth slides, followed by other major and emerging economies. This could lift global and domestic economic spirits.

Liquidity

Liquidity in the US and the European markets disappeared overnight, as more managed funds suspended valuations and redemptions amidst non-functioning credit markets.

Clearly, leverage is the culprit. Investment in mortgage securities and their derivatives, such as CDOs, are financed with bank credit lines to capture the spread and amplify returns.

Reality has dawned on lenders, who are now realising the fragility of the underlying collateral and the almost complete absence of a market for the collateral and its valuation. Margin calls and credit freeze have followed forcing central banks to offer practically unlimited liquidity, even against non-sovereign obligations.

The problems of investors in these instruments are the least from the systemic view. The far bigger concern must be the damage to banks’ balance sheets and credit ‘withdrawal’ as they repair the damage.GOLD falling

As far as the domestic economy is concerned, a perceptible fall in growth is ahead. Inflation will be range-bound after the one-off effect of an oil price increase. Falling capital flows and a weaker rupee are in store and stocks will be sub-performers. Liquidity will be adequate and bond yields will be in a range for now, with chances of a fall later on a persisting weaker economy.

The near certainty of a severe US and European slowdown means a Fed rate cut is a done deal. It needn’t lose sleep over inflation as sharply deteriorating consumer and business spending will keep prices well in check and below the Fed’s informal two per cent limit.
The partially convertible rupee ended at 40.75/76 per dollar on Tuesday, down from Monday's finish of 40.625/635 as it posted its weakest close since June 28. It hit a nine-year high of 40.20 last month.

The 10-year government yield ended at 7.98 percent on Tuesday, level with its close on both Monday and Friday.

The Indian rupee slipped on Friday as a sell-off in the Sensex

The Indian rupee slipped on Friday as a sell-off in Asian stocks caused by global risk aversion spurred investors to pare rupee holdings, though dealers said the local unit was supported by exporters repatriating profits.

The rupee was at 40.64/65 per dollar, weaker than Thursday’s 40.53/54. It hit a nine-year high of 40.20 in late July.

“After a long bull run for the rupee, the market is genuinely edgy at the moment, with sentiment hit,” said the chief dealer with a private bank, who expects the rupee to trade in a 40.60-40.75 range on Friday. “All eyes are on the stock market at the moment,” the dealer added.
As India celebrates 60 years of independence on Wednesday, what of the investors who tip-toed into the fast-developing country's stock market? India funds run by Fidelity F&C, Aberdeen and JP Morgan Fleming have, over the past three years, produced annualised returns of around 35%-50%, defying the sceptics who have long predicted a meltdown on the Mumbai market.

Despite a series of interest rate hikes to head off rising inflation, economic growth in India has remained robust. In the current financial year, the economy is expected to expand by a frenetic 9.4%, the second highest in the world after China.

Foreign fund buying in local shares has been a key support for the rupee, which has risen nearly nine percent this year.

Still, local traders said the rupee was bolstered by exporters who sold overseas dollar holdings, as they considered the current levels attractive after the rupee’s recent gains.
"Any time there is a sudden spike ...in terms of appreciation, which you can address through all these mechanisms (hedging). If you go by July and August, it is not a desperate situation," S Ramadorai told reporters.
Earlier this year, Goldman Sachs raised its forecast for India's sustainable rate of economic growth from 5.7% to 8% a year - and said it is likely to continue at this pace to 2020.

By 2050 it says the US economy will have fallen to third place in the world pecking order - eclipsed first by China and then by India.

GOLD remains the hedge for the future

A country once known as a byword for poverty, malnutrition and stagnation has a new set of icons; Bangalore's software industry, Hyderabad's "Cyberabad", Mumbai's skyscrapers and Bollywood's stars.

In 2000 there were just 3m mobile phones in India. Today the country is adding 6m new subscribers every month - a rate of growth that beats even China.

But behind the gleaming shopping malls and the surging middle-class, there remains colossal deprivation. Around 300 million Indians survive on less than 50p a day and nearly three million children die every year from malnutrition.

Even the better-off can't insulate themselves from the country's growing pains; during 45°c heatwaves, the Indian capital Delhi can be hit by power cuts lasting up to 12 hours a day.

For fund manager Sam Mahtani, of F&C's Indian Investment Company, solving these problems is where his fund - minimum investment £2,500 - is going to make money in the future.

"There has been a marked change in government policy towards infrastructure spending. It says it is going to spend $300bn over the next five years, which compares with just $5bn-$6bn a year in the past few years." His favourite stock is Bharat Heavy Electricals (BHEL), an engineering giant which has just won a 29bn rupee (£350m) contract to build three new power plants to supply the Delhi grid.

"Under the Rajiv Ghandi programme, the government is planning to connect all India's rural areas to the grid, and BHEL will be one of the key beneficiaries," he adds. Since March, the stock has soared from 970 rupees a share to 1,730 rupees this week.

Environmentalists may baulk, though, at the company's predominantly coal-fired power stations.

Mr Mahtani also likes Grasim, a cement maker which will help cover the country in concrete over the next few decades. Since March its shares have leapt from 1,927 rupees to 3,008.

No investor in India can ignore Reliance Industries, the conglomerate that is worth 15% of the entire Mumbai market. Mr Mahtani has 18% of his fund in Reliance, and is enthusiastic about its supermarket strategy in which it intends to become the Wal-Mart of India.

What he's less keen on is the banking sector; he thinks operators such as ICICI Bank will be hurt as the credit splurge of recent years unwinds and households adjust to the recent rise in mortgage rates from 7% to 12%.

Aberdeen Asset Management runs an Indian fund with the same sort of performance figures as F&C - but what's striking is how the manager of the Aberdeen fund, Adrian Lim, has views almost the polar opposite of Mr Mahtani's.

Mr Lim has nothing in Reliance, while his biggest holding is ICICI Bank. He also remains a fan of India's software stocks, when many other investors have taken profits and sold out.

"Reliance is not cheap, and although they've done well in petrochemicals, on the back of the commodity boom, they are now going into areas such as retailing and the Special Economic Zones where they don't have much experience."

Volatility in the Indian rupee can be countered with hedging, and recent moves in the currency were not a desperate situation, the CEO of leading software services exporter Tata Consultancy Services Ltd, said on Friday. He reckons that over five years, interest rates will peg back and help ICICI grow its earnings at 20%-30% a year. This week it was trading at 900 rupees against its 1,010 high in May, but Mr Lim reckons it's a good long-term play.

Among India's software stocks, he picks Satyam, which outsources for US and European companies. But forget call centres - they're yesterday's business, even in India. Its chief source of revenue is writing software code, which enjoys much higher margins.

The rupee hit a nine-year high of 40.20 per dollar last month, squeezing margins for exporters. On Friday it was trading at 40.65/66, up about 9% this year.

The rupee's appreciation poses a major problem to software services exporters who get about 60% of their revenue from the United States.
Indian stocks fell yesterday, joining a global rout, on concern economic growth will slow as losses tied to US subprime mortgages spread.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 231.90, or 1.5%, to 14,868.25, the lowest since July 5. The index posted its third weekly decline, falling 1.8%, the longest losing streak since the five weeks ended March 16.
The S&P/CNX Nifty Index on the National Stock Exchange declined 69.85, or 1.6%, to 4,333.35. Nifty futures for August delivery slid 1.4% to 4,303.
Reliance Industries led declines. US stocks tumbled on Thursday by the most in more than five months after BNP Paribas joined Union Investment Management and Bear Stearns in stopping fund redemptions.
Benchmarks in Asia’s eight biggest markets slid as much as 2% yesterday.
“Our market is moving in line with global trends,” said Nikunj Doshi, who helps manage the equivalent of $541mn in Indian equities at Kotak Mahindra Asset Management Co in Mumbai. “There is definitely more pain left in the system; we may see fresh money flows drying up and unwinding of leveraged trades as investors salvage money from other asset classes.”
BNP Paribas halted withdrawals from funds that owned subprime, or higher risk, home loans. The funds had about 1.6bn euros ($2.2bn) of assets on August 7, after declining 20% in less than two weeks, a spokesman said.
Reliance, the nation’s most valuable company, dropped Rs31.25, or 1.7%, to Rs1,810.75. ICICI Bank, the country’s second-largest lender, fell Rs24.55, or 2.8%, to Rs865.7.
The two stocks account for more than a fifth of the Sensex’s weight.
The rupee had its biggest weekly decline in two months after the benchmark stock index slumped on concern the US subprime mortgage contagion will spread.
The rupee fell for the third day on speculation overseas investors led the stock selloff as they dumped riskier investments.
India’s currency, the best performer in Asia this year, was pushed to a nine-year high last month on foreign buying of local stocks. Overseas purchases of Indian shares already exceed those in the whole of 2006.Indian shares fell 1.54 per cent yesterday to their lowest close in more than a month - although they ended well above their lows for the day - as investors exited riskier assets on fears of a global liquidity crisis.

ICICI Bank fell 2.8pc to a three-month closing low and State Bank of India fell 2.6pc as investors turned cautious on financials on worries about contagion from the problems in the US mortgage sector.

The benchmark 30-share BSE index lost 231.90 points to end at 14,868.25, its lowest close since July 5, with 24 components falling. The index fell as much as 3.5 percent during trade to 14,570.89, its lowest level since late June.

The index lost 1.8pc on the week, its third successive weekly fall, and is now down 6.3pc from a record 15,868.85 hit on July 24.

"Although a tough trading week has finally ended, I really doubt it whether we have seen the end of the turbulence yet because the whole world is turbulent now," said Arun Kejriwal, strategist at research firm KRIS.

"The domestic fundamentals are still good, but we are in a globalised world and we had to react to the credit woes that have taken the entire world in its grip. We are seeing a trend reversal of sorts and this will continue."

Other Asian markets were also spooked yesterday - many ended down more than 2pc - and major central banks tried to soothe nerves by adding funds to money markets.

Export-driven technology stocks helped the market to trim some of its losses on a weakening of the rupee against the dollar, as the credit worries saw an unwinding of carry trades and selling high-yielding currencies such as the rupee.

Infosys Technologies, the second-largest software exporter, ended up 0.8pc at 1,952.25 rupees, and Satyam Computer Services rose 2.6pc to 479.40 rupees.

In the broader market, losers outpaced gainers 1,605 to 1,080 on a higher-than-normal volume of more than 436 million shares.

Rupee / US Dollar Forex Currency News, Gold in India, and
It’s not just the Indian exporters, especially IT firms, who are worried about the rising rupee. The sharp rise of the rupee against the dollar (over 9% in the last 4-5 months) is now causing concern to a section of employees of these companies, the coveted and much-envied bunch of expats and Indian employees paid in dollars, who are drawing a shrinking package.

For example, an American who recently joined at a CXO level position with one of the mid-sized IT firms in Bangalore says, "I joined the company about six months ago when the dollar was worth about Rs 46. Its now Rs 40, so my total salary package has shrinked if you convert it locally." Experts say that this phenomenon significantly reduces the spending capability of such expats.

Says Priya Chetty-Rajgopal of executive search firm Stanton Chase International, "Few months ago, when we were making searches for CEOs in the US for India based companies, we were giving offers of between $200,000 to $300,000. Now, we find it very difficult to offer similar packages to attract talent because of the rising rupee. We would rather negotiate in rupees now, it just makes it easier."

It’s not just expats but onsite employees of IT firms who are also slightly worried. Though they do say that it is still early, some opine that the rupee rise could put pressure on their allowances and savings.
India's government has installed new curbs on overseas borrowing by local companies to counter a surge of foreign money into the country that has fueled inflation and strengthened the rupee.

Companies will not be allowed to bring more than $20 million in overseas loans into the country, the federal finance ministry said in orders released late Tuesday. Those bringing in less than that would still need to get it approved by the central bank, it said.
>The ministry's decision is expected to help weaken the rupee and bring relief to exporters and the country's huge, profitable outsourcing industry, where earnings have been hit by the rupee's sharp appreciation in recent months.

It “cuts out a major portion of the inflows that have contributed to the rupee's strength, particularly in 2007,” Standard Chartered Bank said in a note to its clients.

Wednesday, the rupee fell 0.3 percent to 40.52 per dollar. The Indian currency has risen more than 10 percent against the dollar in the past year and reached a nine-year high of 40.20 per dollar in late July.

Indian companies borrowed about $16 billion from overseas in the fiscal year ended March. That money was on top of a record $15 billion in foreign direct investment and another $7 billion pumped into stocks and bonds, leaving the country with huge foreign exchange reserves and a banking system flush with funds.

India's foreign exchange reserves totaled $218 billion July 27, up $61 billion from a year ago, according to latest official data. Only five other countries – China, Taiwan, Japan, South Korea and Russia – have more foreign reserves than that.

The problem of surplus dollars contrasts with the past, when India had to struggle for decades with a shortage of foreign currency that stunted growth, and plunged the country into a crisis in 1991.

The restrictions announced Tuesday “will have a meaningful impact on (overseas corporate borrowing), which in turn will facilitate better handling of money market liquidity by the central bank,” said Rajeev Malik, a Singapore-based economist with JP Morgan Chase Bank.

The finance ministry's move underscores the risks that confront countries like India and China, where excess inflows of foreign money have complicated the task of fighting inflation and preventing their economies from overheating.

The inflows have pushed up prices, squeezing millions of wage earners and salaried people.

Last week, the Reserve Bank of India unveiled measures to suck surplus cash from the banking system, with the central bank's governor saying, “managing liquidity has become the most challenging task.”

The new curbs are in line with recommendations made recently by the prime minister's economic advisory council, which is concerned about the surge in foreign capital and how it has been harming the broader economy.

Last month, leading software companies that thrive on outsourcing orders from Western countries reported a sharp slowdown in quarterly profit, while one of them – Infosys Technologies Ltd. – announced a first-ever cut in its full-year earnings forecast.

Bhanu, who is working for one of the Indian IT biggies in Boston said, "Some companies are reportedly cutting down on allowances. For instance, employees are being provided with service apartments. Earlier, we got a housing allowance along with the liberty to choose our accommodation. This way, we ended up saving a considerable amount on these trips.”

Most HR heads of companies are not willing to comment on the issue. Wipro’s HR head Pratik Kumar only said, “People continue to be very observant of what’s happening around.’’

Yehasvini Ramaswamy, director-people practices, e2e business solutions said, "For corporates the focus now is on making employees more employable and enhancing global skillset. While there has been an impact on dollar salaries drawn by employees, playing the salary game is not the route corporates intend to take. Corporates are looking at development of their employees and providing them with skills for cross-geographical assignments."

Adecco India COO Sudhakar Balakrishnan, however said, "Most onsite employees have dual compensation, i.e., salary which is paid in rupees plus costs met there (allowances paid in dollars) which the companies bill to the customer. So there might not be any dip. But if the employee is being paid completely in dollar terms, his package will shrink in rupee terms."The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

Settling the markets, will the Rupee and Sensex follow suit.

Indian Rupee: impacted after the Dow Jones it will now be the turn of the dollar. In the past two weeks bourses (Stock Markets) the world over have been under stress. Now, the dollar is likely to add to the turmoil.

The dollar has been falling for quite a while not only against the euro but against many other currencies. In the last six months, the Brazilian real appreciated 11 per cent, Thai baht 11.5 per cent and the South Korean won 2.8 per cent. The Chinese yuan was kept fairly tied to the dollar and appreciated a mere 2.4 per cent. The Indian rupee, on the contrary, was left to the mercy of the market for fear of inflation and appreciated 9.4 per cent, causing many of the export industries considerable strain.

The Japanese yen had made a reversal because of the 'carry trade'. It had climbed down to 124 to the dollar in June. But in the last two weeks the dollar has been falling fast against the yen because, with the chaos in the mortgage market, the 'carry trade' nearly vanished. Consequently, the demand for dollars in Japan dropped and the dollar weakened against the yen.

The dollar will fall further for a variety of reasons. The US economy is slowing down with recession almost in sight. The housing boom is at its end with huge defaults in sub-prime loans causing havoc in the credit market. Industrial growth has dropped and unemployment has risen from 4.5 to 4.6 per cent. Trade deficit in the twelve months ending May has climbed to $ 827 billion. Inflation has eased but is still higher than in Eurozone.

It is against this background that the Federal Reserve decided on 7th August to let the interest rate stay put at 5.25 per cent and, from the assessment made by Ben Bernanke, Federal Reserve Chairman, may linger there for the rest of the year. That keeps foreign investment in US treasuries attractive if only the dollar does not weaken. The latter may be difficult because other economies are performing better.

In the European Union, GDP growth has picked up and is currently more than 3 per cent. Germany, the largest member of EU, is on the bounce. Growth is high, inflation is low, employment is on the upswing, trade is booming and the euro looks strong and safe. Many central banks are re-constructing their currency reserve portfolios with more investment in Euro securities and less investment in US treasuries.

Gold futures rallied Friday, as traders recognized the metal's allure as a safe haven amid worsening credit market troubles that prompted a fresh injection of cash by several central banks.
"Suddenly, the world is realizing that gold is still a safe haven asset," said James Moore, metals analyst at TheBullionDesk.com. "We've seen pretty substantial losses in equity markets."
"I think this is genuine safe-haven buying," Moore said.
Gold for December delivery rose $8.80 to close at $681.60 an ounce on the New York Mercantile Exchange. However, the contract posted a loss of $2.80 on the week.
"Gold investors breathed a collective sigh of relief today as signs of 'proper' behavior in the metal finally emerged," said Jon Nadler, analyst at Kitco Bullion Dealers, in emailed comments.
"The massive injection of liquidity that is taking place globally was also followed by the Fed in an attempt to stabilize values and nerves," Nadler said. "Gold benefited from that action but also from being directly in demand."
Central banks in Europe, Asia and the U.S. injected billions of dollars into banking systems Friday, moving to further boost liquidity in markets suffering the ripple effect of the subprime-credit crisis and saying they stood willing to provide more cash. Read more.
The Federal Reserve said Friday it's providing liquidity "to facilitate the orderly functioning of financial markets." In a brief statement, the Fed said it will provide reserves "as necessary" through open market operations to promote trading in the federal funds market at rates close to 5.25%. See The Fed.
"You are starting to see some bargain-hunting buying coming here," said Charles Nedoss, gold analyst at the Peak Trading Group. "What the Fed did in terms of pumping liquidity into the markets is bullish for the metals. You're going to see some flight-to-quality type buying."
On Thursday, gold fell $13.50, or 2%, to close at $672.80, its weakest closing level since July 27. Read more.
"We saw the market sell off in a global liquid crunch as funds exited gold trades to meet cash margin requirements and to free up capital in general," said Zachary Oxman, senior trader at Wisdom Financial, in emailed comments. "This move was not in the direction of the primary trend and was, more than anything, a temporary move."
"Fundamental factors that support this market continue to be unchanged, which is another reason why I feel that the gold moves of this week to the downside were nothing but short-term liquidity plays that will not hold," Oxman said.
"The market is seeing a re-investment of fund money, strength in the Indian rupee, a positive seasonal pattern and concerns over labor issues in South Africa."
Asian and European equities posted steep declines. On Wall Street, U.S. stocks remained under water after an attempted rebound. The Dow Jones Industrial Average ($INDU :
13,164.19, -106.49, -0.8% ) was last down 100 points. See Market Snapshot.
Other metals prices ended mixed on Nymex. September silver gained 16.50 cents to close at $12.870 an ounce and October platinum rose $4 at $1,279.30 an ounce.
September palladium fell $4 to end at $358.20 an ounce and September copper edged down 0.15 cent at $3.3595 a pound.
The dollar traded slightly lower against most major European currencies. Japan's yen was steady against the dollar but rose against most high-yielding currencies as investors sought to unwind positions on risky trades ahead of the weekend. See Currencies.
Crude-oil futures pared most of their losses. See Futures Movers.
Inventories and indexes
Gold warehouse inventories fell by 9,864 troy ounces to 7.14 million troy ounces as of late Thursday, according to Nymex data. Silver and copper supplies were both unchanged to stand at 133.3 million troy ounces and 21,655 short tons, respectively.
There are good chances therefore that the dollar will fall against both the euro and the yen. It will not be long before the dollar will trade at 1.4 to the euro or 110 yen to the dollar. The rupee may not appreciate because the trade deficit has bloated, the limit on ECBs for domestic spend has been lowered and, with the slow down in the US economy and the chaos in the credit market, FII investment in India will taper down.
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE).
Euro / Rupee and Yen / Rupee.Mumbai, Aug 10 The Indian market continues to be impacted by global uncertainties.

Responding to the Dow closing lower on Thursday at the New York Stock Exchange, the market suffered further losses on Friday. The benchmark BSE Sensex was down by 231.9 points to close at 14,868.25 today.

The Sensex opened 425 points lower at 14,675 to fall further to an intra-day low of 14,571 in early session deals. However, ‘short covering’ and ‘value’ buying, especially in information technology and consumer durables stocks, in the afternoon session saw the index shrug off, at least partially, the market’s ‘US sub-prime’ woes.

Sub-prime mortgages are the riskiest property loans, often extended to people who have payment difficulties or a bad credit history.

But the recovery, such as it was, was not good enough and the index closed the day at 14868.25, down 1.54 per cent from the previous day. On the BSE, market breadth was negative as 1016 stocks advanced while 1597 stocks declined.

“Panic selling has been triggered in the Indian market on unconfirmed reports that the sub-prime crisis has started affecting other European banks as well,” said Mr N.V. Shah, Director, NVS Brokerage.

Central banks globally are pumping a lot of money to ensure liquidity, which clearly suggests that there is a problem, said a senior official from a Mumbai-based asset management company. Market players believe sentiments continue to be weak as the actual size of the sub-prime problem is not known. “Stability will be back in the global markets only when there is complete dissemination of the depth of the problem. We will have clarity as more information about the size of the crisis starts trickling in the next few days,” said Mr Anil Advani, head of research, SBICAP Securities.

Even though the sub-prime crisis does not have a direct impact on the Indian equity markets, it has affected the flow of funds into India, said Mr Shah. Banking stocks witnessed a steep fall. Except information technology, all sectoral indices registered losses. IT registered gains as the rupee marginally weakened against the dollar to close at Rs 40.63/64 today, said Mr Vishwas Agarwal, Technical Analyst.

Sensex and Indian Rupee feel pain, money moves to gold

The rupee on Monday reacted sharply downwards to end at 40.41/42 against the US dollar on the back of distinctly bearish equity market.

In fairly active trade at the Interbank Foreign Exchange (forex) market, the Indian unit opened sluggish at Rs 40.48/50 a dollar and ended at Rs 40.41/42 as against Rs 40.3350/3450 on last Friday after moving in a range of Rs 40.41 and Rs 40.52.

Forex dealers attributed the steep fall in the rupee to weak equity market where the benchmark Sensex tumbled by 235.37 points to close at 14,903.03.

They expect more capital outflow in near future and that might affect the rupee sentiment further. Foreign fund were net sellers in the last week.
Reacting sharply to the bearish equity market, the rupee today moved downwards to 40.48/49 against the US dollar in morning deals.

The Indian unit opened sluggish at 40.48/50 a dollar and remained at lower level to 40.48/49 in late morning deal even as the trade at the Interbank Foreign Exchange (forex) market remained fairly active.

Forex dealers attributed the steep fall in the rupee to weak equity market where the benchmark Sensex tumbled to one- month low of 14,705.58 points in the early morning trade.

The Sensex today registered a sharp loss of 432.82 points over the previous close.

They said expectation of more capital outsource in the near future might affect the rupee sentiment further. Foreign funds were net sellers last week.

Dollar short covering by traders as well as good dollar buying by oil refinery companies also weighed on the rupee.

Dollar short covering by traders as well as good dollar buying by oil refinery companies also weighed on the rupee.
Rupee / US Dollar Forex Currency News,

Sensex losses erode Rs 2,29,308 cr market cap in 9 sessions.

Domestic stocks fell to their lowest level since July 6 on global equities sell-off on concerns that losses in the US mortgage market would impact the world�s biggest economy.

With Monday�s fall, the benchmark Sensex has lost nearly 1,000 points in nine trading sessions, wiping off Rs 2,29,308 crore in market capitalisation.

The fall in Indian equities mirrored the fall in European and other Asian stock market rout, which shaved off $2.66 trillion from global equities. The Dow Jones industrail average was up 127.22 points or 0.97 per cent at 13,309.13 at the time of going to press.

�The big volatility in Indian markets and the resulting fall is due to global cues. We are reacting to the US subprime woes,� said Seshadri Bharathan, director (stock broking) at Dawnay Day.

The Sensex opened with a huge negative gap of 245 points at 14,893 on the back of weak cues from global markets. The index soon tumbled to a low of 14,706 � down 432 points from its last close.

The index witnessed a minor pullback of 100-odd points in noon deals. A fresh round of buying towards the end of the day saw the index recover some more lost ground before settling at 14,903 � down 235 points from Friday.

The NSE-50 index of the National Stock Exchange slid 62.05 points, or 1.4 per cent, to 4,339.50. Nifty futures for September delivery lost 44.35, or 1 per cent, to 4322.

Experts said foreign institutional investors (FIIs), who had been major sellers in the last two weeks, might be booking profits in India to offset losses in the US. It is estimated that the FII investments in India of around $50 billion have grown to $200 billion, making them book a part of the profits in the country as slowdown concerns in the US loom.

The rupee fell the most in more than a week after FIIs sold Rs 1,395 crore worth of stocks on Monday. The rupee ended the day 2 per cent lower at 40.41/42 against the dollar.

Sriram Iyer, head of research at Edelweiss Securities, said the current fall in prices would offer opportunities for investors to pick quality stocks.

Hindalco, which shed 3.05 per cent to Rs 157.45, dropped the most among the Sensex stocks, followed by ICICI Bank (down 3.03 per cent to Rs 887.60), Maruti Udyog (down 2.95 per cent to Rs 825.20), Reliance Communications (down 2.92 per cent to 531.55) and Larsen & Toubro (down 2.86 per cent to Rs 2,448.50). Reliance Industries fell 1.1 per cent, to Rs 1,782.15. Overall, 24 of the 30 stocks in the Sensex declined.

Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

Rupee ends higher vs US Dollar, Gold still shining

The rupee on Thursday recovered moderately to close at 40.4150/4250 against the US dollar on modest gain in equity markets and expectations of higher capital inflows.

In lacklustre trade at Interbank Foreign Exchange (Forex) market, the Indian unit opened better at 40.40/42 per dollar from Wednesday's close of 40.45/46. Later, it was trapped in a narrow range of 40.39 and 40.48 per dollar. It ended the day slightly higher at 40.4150/4250 a dollar.

The rupee got support from modest recovery in equity markets where the benchmark BSE Sensex rose nearly 50 points, expecting increased portfolio investments in near future.

Foreign Institutional Invesors (FIIs) have pumped in over USD 10 billion in the current year so far, near their highest investments of USD 10.7 billion in 2005.

Dealers attributed rupee's lower levels to stray buying by oil refining companies for meeting import requirements. Global crude oil prices remained high near USD 77 a barrel.

Lack of any intervention by the Reserve Bank also aided the rupee's firm trend. The recovery was also aided by announcement of hike in Cash Reserve Ratio (CRR) by RBI on Tuesday to suck excess liquidity in the banking system.

Meanwhile, the euro continued to weaken against the dollar while yen remained solid, as US credit concerns and sentiment in the equity market again hogged the spotlight.
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
The Rupee today closed firm at 40.42/43 per US dollar after staying highly volatile throughout the day as confusion gripped the forex market over the nature of inflows likely to come about next week.

The unit had closed at 40.45/46 yesterday.

Market observers said tuesday's hike in Cash Reserve ratio (CRR) is expected to stage its part in the market next Monday when the hiked reserve rates will become effective.

In the morning, rupee opened at 40.44/45 per dollar slightly stronger from the previous close of 40.45/46 per dollar and later inched up to a day's high of 40.39 per dollar before tumbling by 8 paise in the late day trade to 40.47 per dollar. Rupee later closed the day's trade at 40.42/43 per dollar.

''Hike in CRR accompanied by rest of the measures adopted by central bank can tighten the liquidity conditions, which may, in turn, exert pressure on Rupee value.

Rupee may stage a comeback in coming weeks along with a jump in call rates.'', said a leading dealer.

Meanwhile, forward contarcts bettered margins during the day as six-month premia ended at 1.93(1.82) per cent and annualised premia at 1.89 (1.79) per cent.

Rupee was weak against major world currencies today. Against Euro, it ended at 55.22(55.17/18) per unit. Against Pound Sterling, it closed at 82.00(81.82) per unit, while against the Japanese Yen, it was quoted at 34.00(34.06/07) per hundred units each.

Reserve Bank today fixed the reference rate at Rs 40.43 per US dollar, up by twelve paise, compared to its yesterday's rate of Rs 40.55 per dollar.
t looked simple. Stocks and stock funds were down. So gold funds rose in July.

They gained 3.73% on average, according to Lipper. It was the group's first month in the top spot since November.

In a bruising month for the overall market, it was the only sector to gain ground.

Natural resources funds gave back 0.40%. Tech funds slid 0.84%.

But gold's gain wasn't conventional. "It wasn't simply a story of stocks down, gold up," said Thomas Winmill, manager of $220 million Midas Fund MIDSX. Bullion buoyed the sector. Silver glittered even brighter. But gold stocks were largely leaden, he said.

"Petro dollars in Russia and the Middle East chased precious metals," he said. "And central banks weren't selling."

Limiting Sales

Central banks of 18 major nations have agreed to sell no more than 500 tons of gold annually. Their fiscal year ends Sept. 30. So far this year, the group has sold 350 tons. Last year banks sold less than their quota. "I expect the same this year," Winmill added. That dampens supply in the face of strong demand.

Also, the dollar kept falling vs. key currencies. That also boosted gold for global investors.

Gold stocks got hurt by rising commodity prices, Winmill said. "Mining companies use a lot of diesel, rubber tires and steel," he said. "Mining costs increased a lot. That compresses margins."

Further, many big miners have little growth or declining production. "The longer that older mines dig, the more expensive their yield becomes," Winmill said. "They literally are digging themselves into a hole."

Winmill added: "We focus on miners with growth in their portfolios. Generally, that means smaller-cap miners, with newer operations, who may be more entrepreneurial."

Platinum Prospects

In balance, Winmill prefers silver to gold. It will get more of a boost from year-end holidays and the Indian wedding season.

Silver Wheaton SLW gained 17% in July. It was powered by silver's sheen. It started from a low base, having been oversold in June.

Going forward, Winmill prefers base metals vs. precious. "Global growth will fuel commodities in general and industrial metals in particular," he said. Global demand for cars will drive use of platinum.

Winmill would be more bullish on gold if the Federal Reserve cuts interest rates. "That would hurt the dollar, helping gold," he said.

Fallout from subprime lending woes tainted much of the market in July. Investors sold off risky stocks and debt.

Financial services funds lost 7.00%. Not knowing which stocks would be stung next by problem loans and the credit crunch, investors fled the sector overall.

Real estate funds lost 7.26%. Many real estate investment trusts are heavily leveraged. Increasingly averse to credit risk, investors exited REITs.

Tech stocks were hurt less than most sectors in the market sell-off. That's because tech companies tend not to be heavily leveraged, said Kevin Landis, who runs the $700 million in five Firsthand tech funds.

Tech's strongest July theme was alternative energy. "Anything associated with that has done well all year," Landis said.

Two tech industry segments benefited. Firms involved with solar cells are getting more business.

Sunpower SPWR gained 12%. "They make the highest efficiency solar panels shipping today," Landis said. His funds own Sunpower via stakes in Cypress Semiconductor (NYSE:CY) CY.

The second hot solar segment is efficiency companies. "Their technologies let you be smarter in running a building, factory or street lights," Landis said. "Reducing wasted energy results in free energy."

Echelon ELON, which makes hardware and software that lets devices communicate via control networks, gained 26%.

Landis sees no sustained let-up at least this year for either alternative energy or efficiency firms.

July was the sixth month in a row resources funds finished among the top three sectors.

The commodities category had several drivers. Oil crossed $70 per barrel. Global GDP growth stayed strong. The dollar stayed weak. That persuaded many investors they could put their money to better use by investing in commodities, said Brian Hicks, co-manager of $1.5 billion U.S. Global Investors Global Resources Fund PSPFX.

Still, emerging markets were a soft spot for commodities funds. "They sold off as investors demanded higher rates from businesses and governments that wanted debt financing," Hicks said.

DryShips DRYS reflected demand for commodities. The dry-bulk shipper was up 218% this year through July 31. It gained 32% in July alone.

Rupee morning update, continued exporter concerns from Indian

The Indian rupee was quoted slightly weaker in the absence of any dollar buying after a firm start at the Interbank Foreign Exchange (forex) market today.

The trade at the Interbank Foreign Exchange (forex) market was dull this morning even as the local currency resumed strong at 40.40/42 per dollar against overnight close of 40.45/46 per dollar.

It later fell back to 40.4650/4750 per dollar in late morning deals.

Forex dealers said the activity was at a low ebb with the exchange market largely influenced by equity markets in Asian countries.

Asian markets suffered a further setback in morning trade while the benchmark Sensex gained about 103 points in volatile trade after yesterday's stocks carnage.

Gold continued its recent slide.
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
The effect of the rising rupee is showing on India's exports which rose 14.4% during June this year after putting a stupendous show of over 20% rise for nearly three years.

The impact of appreciation of the Indian currency against the US dollar is more stark when you look at the export data in rupee-terms.

With exporters getting less than Rs 41 for every dollar worth of exports, instead of over Rs 46 last June, exports rose less than 1% to Rs 47,922 crore during June this year, compared to Rs 48,386 in June 2006. An appreciation of the rupee against the dollar has a more pronounced effect on India's exports than a rise against other currency since over 70% of the bills are invoiced in dollar-terms.

The rupee has appreciated over 11.5% between June 2006 and this year, while the currency gained 8.5% between January and July this year, prompting the government to announce a relief package for exporters last month.

The currency appreciation and a slower rise in June also pulled down first quarter growth to 18% with exports touching $34.3 billion. In rupee-terms, the increase was under 7% during April-June 2007 with exports during the period estimated at Rs 141,331 crore.

A more precious rupee also means a higher rise in the import bill and along with a low growth in exports, it results in a widening of the trade deficit which nearly doubled in the first quarter and rose over 100% in June when the impact was felt most.

India's imports rose 37% during June 2007 and were valued at $19.2 billion. During the month, oil imports rose nearly 10% to $5.7 billion, while non-oil imports were up over 52% at $13.5 billion.

During the first quarter, India's oil import bill increased 4.2% to $14.8 billion, and non-oil imports rose over 50% to $40 billion.

While economists said it was too early to comment on the adverse impact of a widening trade deficit since India had a large foreign exchange reserves.

A government study pointed out that textiles and information technology sectors would be the worst hit due to the appreciation of the rupee against the dollar while gems and jewellery and leather sectors would also face a loss in profitability and competitiveness. The big IT companies have already shown lower profit growth in Q1.

China looking to compete on Indian stronghold. Rupee / Yuan

India, which has emerged as the back-office of the world in recent years, is expected to face stiff competition from countries like China, Malaysia and Singapore even as the global outsourcing industry is pegged to reach a market size of $1,430 billion by 2009-end.
INDIAN GOLD / RUPEE
A survey conducted by global consultancy firm Frost and Sullivan has ranked India as the top destination for shared services and outsourcing (SSO) across various verticals. The country is followed by China, Ireland, Singapore, Malaysia, Mexico, Czech Republic, Poland, the Philippines and Canada.

Low labour costs and abundant supply of skilled manpower are the key factors behind India's sustenance as the top outsourcing destination globally. Outsourcing sector in India is experiencing consolidation and SSO providers are moving up the value chain, expanding their onshore presence to strengthen global delivery capabilities, the report said.

But there is a threat from countries like China which is fast emerging as an attractive destination for outsourcing IT, research and development and procurement services, it added.

India's growth is beleaguered by factors like high attrition rates, poor infrastructure, rising wages and appreciation of rupee against US dollar, the report said.

"SSO is no longer just about cost arbitrage, instead SSO operators are adding value through their skill sets and competencies wherever they are located," Frost & Sullivan Vice-President Asia-Pacific (ICT Practice) Nitin Bhat said.

The study also forecasts the global SSO market will grow at a compound annual rate of 15 per cent to reach a market size of 1,430 billion dollars by end-2009.

Malaysia, which boasts of excellent infrastructure and low attrition rates, also makes for an ideal outsourcing hub, the Frost and Sullivan study said. The south-east nation is already a strong player in banking, financial services and insurance (BFSI), transportation and energy verticals.

Besides, companies such as Dell, Satyam and IBM have recently made outsourcing investments in Malaysia, making it a hub catering to the technology sector, it pointed out.

The study covered Fortune 500 and Forbes 2000 companies and was conducted across seven major industry verticals -- banking, financial services and insurance, technology/ICT, healthcare industry, transportation and logistics, energy, fast-moving consumer goods and media and entertainment.

A report by audit firm PricewaterhouseCoopers (PWC) has also said although India remains the most favoured destination for outsourcing, countries like Singapore were gaining favour.

A number of financial services companies, including Barclays and Credit Suisse have expanded their support operations with the Monetary Authority of Singapore actively promoting the country as a financial center.
Sesa Goa Ltd., India's biggest non- state iron ore exporter, said profit fell 11 percent, the first drop in three quarters, after the rupee's gain against the dollar eroded earnings.

Net income declined to 1.18 billion rupees ($29.3 million) in the three months ended June 30 from 1.33 billion rupees a year earlier, Managing Director P. Mukherjee said yesterday by phone from Goa, where the company is based. Sales climbed 3.6 percent to 4.54 billion rupees.

The currency's 9.7 percent gain against the dollar this year crimped earnings from sale of iron ore overseas. Sesa, which has agreed to be acquired by U.K.-based Vedanta Resources Plc, exports 93.5 percent of production to steelmakers in countries such as China and Japan.

"Service providers are gaining domain specific capabilities to move-up the value chain. This trend is expected to boost further consequence to decreasing cost arbitrage, increased competition, and the relentless search for value," Bhat said.
Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex stock market index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.
The dollar gained strength against the rupee in inter-bank market over the week on Friday, gaining two paisas.

The dollar closed at Rs 60.38 at buying and Rs 60.43 at selling as compared to last week closing of Rs 60.36, gaining two paisas.

The pound sterling strengthened against the rupee as it closed at Rs 123.96 at buying and Rs 124.16 at selling as against Rs 122.72 at buying last Friday, gaining Rs 1.24. The euro weakened against the rupee as it closed at Rs 83.28 at buying and Rs 83.21 at selling as compared with Rs 82.03 at buying, losing Rs 1.18 over the week.

Open market: The dollar lost strength against the rupee in open market. It closed at Rs 60.97 at buying and Rs 61.02 at selling as compared with Rs 60.98 at buying of last week’s closing, losing one paisa.

The pound sterling also strengthened against the rupee as it closed at Rs 124.60 at buying and Rs 124.80 at selling as against Rs 123.25 at buying, gaining Rs 1.35. The euro gained strength against the rupee. It closed at Rs 83.70 at buying and Rs 83.90 at selling as against Rs 83.50 at buying, gaining 20 paisas.

The European single currency soared to a new record high against the dollar on Friday as the US currency continued to be undermined by housing market worries.

The euro fetched $1.3820 dollars from $1.3802 in New York late on Thursday, after trading as high as $1.3843. The pound rallied to a fresh 26-year high to $2.0546 after $2.0486 Thursday. The dollar also hit a six-week low against the yen of 120.85. It later stood at 121.26 yen, down from 121.99 yen on Thursday.

“With no economic data released today, the only thing that could rattle the currency markets was a reversal in US stocks,” said Kathy Lien at Forex Capital Markets. “Not only did a reversal actually occur, but bond yields also fell sharply, triggering major losses in the both the US dollar and carry trades,” a reference to borrowing at low rates in one currency to invest elsewhere for higher yields. Worries about problems in the US subprime mortgage sector — loans to homeowners with patchy credit histories — caused sharp falls on global equity markets on Friday

The stronger rupee (Rupee / US Dollar Forex Currency trade hurts exporters

As U.S. politicians line up to bash Beijing for its weak currency and gigantic trade surplus, one message they might want to offer their constituents is, buy Indian. Unlike China, Asia's other emerging giant has allowed its currency to appreciate almost 9% against the greenback since January. You might not have heard much about that in the U.S. — where total imports from India last year amounted to $22 billion, compared with $288 billion from China — but in India the rupee's appreciation is one of this year's biggest business stories, as exporters and labor groups scream that the strong currency will mean lower profits and fewer jobs.

So, what's going on? The rupee exchange rate is neither completely free-floating nor fixed, but is "managed" by the Reserve Bank of India through buying and selling other currencies. Up until April, the Reserve Bank was buying lots of U.S. dollars — perhaps as much as $24 billion in the previous 6 months — to keep the rupee at around 44 to the dollar. But with investor sentiment so hot on India and money pouring in from abroad — international investors have bought more than $7.5 billion worth of Indian stocks so far this year, compared to $8 billion in all of 2006 — the Reserve Bank found itself having to spend more and more on foreign currencies just to keep the rupee stable. When inflation shot up to over 6% in April, Bank officials appeared to decide — they never comment explicitly on such matters — to stop buying dollars. The result was, over the next couple of months, a strengthening of the rupee to close to 40 to $1.

The stronger rupee (Rupee / US Dollar Forex Currency trade) hurts exporters because it makes their products more expensive overseas. Infosys Technologies, India's number-two software exporter, cut its full-year earnings forecast last week, blaming the rupee's sharp rise, which it said was hurting the company's operating margins. Analysts expect other big software and outsourcing firms, many of whom earn lots of their profits in U.S. dollars, to issue similar warnings when they announce their quarterly earnings this week. Indian news reports have also quoted an unnamed government official warning that the country would be lucky to match last year's total export figure — about $125 billion; way down from the $160 billion the government had forecast just three months ago — and also that up to 275,000 jobs might be lost as a result of exporters feeling the pinch.

The stronger rupee may have helped push inflation down, "but at what cost?" asks Paresh Nayar, head of currency and bond trading at India's Development Credit Bank. "Exports are slowing, imports are ballooning. Perhaps we should be more like China. Other countries might complain, but the Chinese still watch their exports boom and say 'Let the whole world cry.' "

But Armeane Choksi, chairman and managing partner of Hudson Fairfax Group, a U.S.-based investment fund focused on India, argues that the Reserve Bank is correct in maintaining its primary focus on suppressing inflation. If inflation spikes again, he says, poorer Indians will suffer most because food and housing will cost more. "The Reserve Bank is not an export promotion agency," says Choksi. "It's doing the right thing." A stronger rupee, he says, will also force Indian companies to become even more efficient, which will make them more competitive in the global market, especially as China's currency slowly appreciates over the next couple of years.

The strengthening rupee may also send an even more important signal: India is not China. It helps of course that India's trade surplus with the U.S. last year was just $11.7 billion compared to China's whopping $232.5 billion. But by allowing the rupee to strengthen over the past few months, India is showing it's prepared to play much more fairly in the global market. "India is seen as a more or less unambiguous ally [to the U.S.]," says Choksi. "China? Is it a threat? Is it a competitor? Is it a partner? We're still not sure."

Of course, the Reserve Bank could still intervene to push India's rupee lower again. There is some evidence that it did just that in a very small way last week. But both the anonymous government official warning of rupee-related job losses and investor Choksi see the rupee continuing to rise in the coming months. If that happens expect to hear a lot more bleating from India's exporters — and not a word of complaint from India's trading partners around the world.

Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

Nightly Rupee / Dollar update

Volume and pricing growth helped the country's largest IT services provider, Tata Consultancy Services (TCS), to partly offset the effects of a wage hike and an appreciating rupee in the first quarter ending June 30, 2007.

The firm posted a consolidated net profit (Indian generally accepted accounting principles) of Rs 1,203 crore a 36.3 per cent increase over Rs 882.66 crore in the corresponding period last financial year.

Its consolidated revenue of Rs 5,203 crore saw a 25.2 per cent increase over Rs 4,155 crore in the corresponding quarter last year.

The infotech major saw a marginal rise of 0.8 per cent over the previous quarter�s revenue of Rs 5,162 crore and a 0.7 per cent rise over the previous quarter�s net profit of Rs 1,195 crore.

In dollar terms, though, its revenue and net profit grew by 8 per cent in the first quarter, driven by volume increases with an upward pricing bias, and the banking and financial services (revenues of this segment grew by 13 per cent), telecom and life sciences verticals �performing strongly�.

The appreciating rupee, however, did impact the company's margins by 258 basis points. The operating margin was down 281 basis points to clock 25.49 per cent against 28.3 per cent in the previous quarter. The wage hike, too, impacted the first quarter margins by 208 basis points.

This quarter has validated the strength of our business model and our ability to respond to the external financial environment and drive growth under challenging circumstances. Despite factoring in wage hikes and an appreciating rupee, we have maintained profitability by great execution, demand creation and strong financial management, said TCS CEO and MD S Ramadorai.



TCS partly countered the effects with productivity improvement, amounting to 213 basis points. Hedging of the rupee against the dollar, Euro and other currencies also helped. Hedging gains were Rs 107 crore this quarter. TCS had about $2.5 billion outstanding in hedges on June 30.

Improved pricing also helped the company. TCS effected a pricing growth of 0.6 per cent this quarter.

It is pursuing 20 deals of $50 million each. For contracts coming up for renewal, the management will increase its pricing between 3 and 5 per cent. For new clients, it will be 5 per cent upwards.

S Mahalingam, chief financial officer, said: �Compared with a year ago, the margin position coming into this financial year remains stronger and we will continue to manage this aspect of our business throughout the year.�

The company is focusing on moving its clients to higher-revenue bands. �TCS now has 6 customers with annual billings of over $100 million,� said N Chandrasekaran, head, global sales and operations.

Meanwhile, TCS remains the largest private sector employer with around 95,000 employees on its rolls on June 30. It continues to have the lowest attrition rate in the industry at just 11.5 per cent.

�To ensure a steady flow of recruits, we have hired a larger number of experienced professionals in Q1 traditionally a slow period for inducting freshers,said S Padmanabhan, global head, human resources. TCS continues to have the lowest attrition rate in the industry at just 11.5 per cent.

And global branding campaigns add to the strength of the company. �Our brand-building campaign based around the concept of certainty in IT services continues to increase awareness of our brand worldwide and position us as a leading IT service provider globally, helping us gain mindshare from our customers and potential employees,� said Phiroz Vandrevala, Head, Global Corporate Affairs.

Its employee utilisation rates range between 78.2 per cent and 79.4 per cent. There was a gross addition of 8,706 employees of which 2,898 were trainees and 4,795 were experienced professionals in India and 1,013 employees in overseas subsidiaries and branches. The net addition was 5,512 employees.

Rupee / US Dollar Forex Currency News, Gold in India, and The Sensex index on the Bombay Stock Exchange (BSE). Euro / Rupee and Yen / Rupee.

Monday Morning Rupee / Gold update, Individual Stock news

The rupee on Monday appreciated further against the US currency to close at 40.3700/3750 on the back of sustained rally in equity markets amid weak dollar overseas.

In two-way trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened slightly better at 40.40/42 a dollar from last Friday's close of 40.4200/4250 per dollar.

Later, it gyrated in a range of 40.30 and 40.42 per dollar on alternate bouts of buying and selling.

Finally, it ended at 40.3700/3750, a net rise of nearly five paise over the previous close.

A sustained rally in equity markets mainly helped the rupee's surge on expectation of robust capital inflows.

Foreign Institutional Investors (FIIs) reportedly pumped in over 1.2 billion dollars in the last week.

The rupee also got strength from dollar sales by banks as well as exporters, forex dealers said.

The rupee got support from weak dollar overseas as the dollar declined to a record low versus the euro for the fourth consecutive session Friday as weaker-than-expected US retail sales data made matters worse for the the battered greenback.

Domestic currency reacted downwards to some extent after the central bank intervened to cap the rupee's surge to prevent exporters competitiveness.

According to analysts, strong intervention by the apex bank and heavy selling by foreign funds in equity markets could stem the rupee's upsurge, said chief dealer of a private bank.

FIIs have bought nearly 2.1 billion dollars equities in the first nine days of July, taking their total purchases this year to 7.8 billion dollars, against 7.9 billion dollars pumped in last year.

Dealers are looking at the stock market for further clues about the rupee's direction as the benchmark continued it's record breaking spree and was on Monday up by another 38 points.

The Reserve Bank of India (RBI) fixed the reference rate for the US currency at Rs 40.37 per dollar and for the single European unit at Rs 55.67 per euro.

The rupee premiums on forward dollar dipped further on sustained receiving by exporters.

The Benchmark six-month forward dollar premiums payable in December ended at 30 - 32 paise, down from 34 - 36 paise on Friday and the far-forwards maturing in June also closed lower at 71 - 73 paise from 74 - 76 paise previously.

In cross-currency trades, the rupee reacted downwards against the British Sterling and the Japanese Yen while it improved further against the Euro.

The Indian unit declined against sterling to close the day at Rs 82.29/31 per pound from Friday's close of Rs 82.14/16 per pound and also softened against the Japanese Yen to Rs 33.17/19 per 100 yen from previous close of Rs 33.03/05 per 100 yen.

However, the rupee edged up against the single European currency to Rs 55.66/68 per euro from last close of Rs 55.68/70 per euro.

India's largest software exporter Tata Consultancy Services said Monday that its first quarter net profit rose by 36 percent despite sharp gains in the rupee this year that hit earnings.

The firm, also known by its acronym, TCS, said net profit for the three months to June rose to 12.03 billion rupees (481 million dollars) from 8.83 billion rupees a year earlier.

Income in the first quarter rose nearly 27 percent to 53.65 billion rupees.

TCS shares fell 8.95 rupees or 0.79 percent to 1,127.9 ahead of its earnings statement, while the Indian stock market rose 0.25 percent or 38.5 points to a record 15,311.22.

Dealers had expected sharp gains in the rupee this year to a near decade high against the dollar to hurt local currency earnings, since many of the firm's clients pay in dollars.

"We have maintained profitability despite an appreciating rupee and wage hike factors," said S. Ramadorai, the chief executive and managing director of TCS.

TCS added 54 new clients in the first quarter while 8,706 employees joined in the same period to bring the workforce to 95,000.

"TCS has showed a better-than-expected performance, despite being hit by the strong rupee. We are more positive on TCS going ahead, with a right mix of business streams," said Ashwin Mehta, an analyst with brokerage Ambit Capital.

TCS said it had also struck a 100-million-dollar deal with an Asian telecom company to provide a full range of outsourced services. It did not provide more details about the agreement.

TCS is part of India's diversified Tata group and employs people from 60 different nationalities.

The Mumbai-based firm earns nearly half of its revenues from banking and financial services in an industry that relies on India's cheap but skilled English-speaking workforce.

TCS listed on Indian exchanges in August 2004 after raising 1.2 billion dollars.

neoIT, a leading services globalization(SM) consulting firm, today issued a research report which examines the impact of currency fluctuations on clients who are leveraging global sourcing. These fluctuations are currently impacting the profitability of service providers and client should expect vendors to react by passing along costs wherever possible.

The latest research report from neoIT, Currency Risk: Overcoming the Dollar's Demise, helps clients plan for changes in outsourcing relationships that will inevitably occur as offshore vendors adapt.

"While the current downward movement of the U.S. dollar is not likely to result in major changes for global services clients, clients need to be prepared for longstanding vendors to undergo behavior changes," said neoIT CEO Atul Vashistha. "In India, for example, the U.S. dollar has slipped 8.5% compared to the Rupee since the start of 2007. Putting contingency plans in place now to deal with currency risk will help to avoid unpleasant surprises later in the year."

The newest research brief looks at the implications of currency fluctuations on vendors and the potential impact on client organizations. neoIT's research recommends client organizations consider developing contingency plans, such as building currency fluctuations and hedging risk into global services contracts. At the same time, clients need to closely monitor current sourcing agreements so that they are aware of incremental changes in vendor's practices and billing procedures which subtly mask price increases.