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Rupee falls to 72.08 per dollar; IT, pharma, gold to reap gains

Rupee falls to 72.08 per dollar; IT, pharma, gold to reap gains
November 13
19:09 2019

Closing the day 62 paise lower at 72.08 per dollar on November 13, the Indian Rupee posted the biggest single-session fall since September 16 after India’s industrial output contracted by the most in almost seven years.

The local currency has fallen 1 rupee 11 paise so far in November, but its fall will be limited in the near-term and may have a limited impact on the equity market, experts said.

On November 11, the rupee tumbled by 19 paise to a near one-month low at 71.46 against the US dollar after fresh concerns over the US-China trade deal and Hong Kong unrest kept forex market participants edgy. The currency market was shut on November 12 on account of Guru Nanak Jayanti.

Weak macroeconomic environment, Moody’s changed outlook on India and global factors are among the key factors that are keeping the rupee wobbly.

Analysts believe the rupee may see volatility in the coming sessions due to developments around the US-China trade talks and fluctuations in crude oil prices.

Even though analysts acknowledged that Moody’s changed outlook on India exerted pressure on the rupee, its impact will wane soon, they said.

“Normally, news like Moody’s outlook change gets factored in the market as and when it happens. So, the future impact of this may not be prominent,” said Vishal Wagh, Research Head at Bonanza Portfolio.

Wagh expects rupee’s fall to stop near 72.50 and there may not be a big sharp fall in the coming few months.

“The export-oriented stocks should be bought like IT and pharma. And import dependant stocks should be on sell-side like oil,” Wagh said.

Rupee could see some weakness as hopes of deep supply cuts by the OPEC member countries during the upcoming OPEC meeting on December 6 could lift crude oil prices, eventually putting pressure on the rupee, said Choice Broking.

Vinod Nair, Head of Research at Geojit Financial Services also thinks Moody’s changed outlook on India is a factor that has infused volatility in rupee but he added that the market has already digested the report.

“We don’t think that it is going to completely change the performance of the equity market since the data is already digested by the market,” Nair said.

Nair expects IT, pharma, export-oriented stocks and gold to reap gains in the short-term owing to rupee’s weakness.

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Shrikant Chouhan, SVP – Technical Research at Kotak Securities doesn’t see any extensive fall in the rupee in the near-term.

“If rupee falls from here then it would impact the market, however, as the reform process has started we are not seeing extensive fall in the rupee,” Chouhan said.

Chouhan added that in case the local currency falls to 72.50 or 73 levels, which is the maximum downside that he expects, then it would generate mild momentum for the Technology sector.

However, along with rupee’s depreciation, a rise in crude prices would have a major negative impact on oil refinery and cyclical sectors, Chouhan cautioned.

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