CEE-YES DAILY BULLETIN
April 7, 2015
G L O B A L - BUSINESS & ECONOMICS
RBI will most likely leave its rates unchanged at 7.50% at its policy meeting, but reduce it by 25bps by end of June - Reuters poll. Only 9
of 40 economists surveyed expect RBI to cut repo rate at April 7 meeting, while 4 said it would lower banks' CRR to boost their lending
power. Median forecasts suggest RBI will cut by 25bps in May or June, and follow it with another cut of same scale in last 3 months of
2015. CRR which has been on hold at 4% since early 2013 will likely stay unchanged until at least June 2016, the most distant forecast
covered by poll. RBI Governor has surprised forecasters by acting outside of policy meetings to cut rates in January and March. Sharp falls
in crude oil prices subdued inflation across the globe, giving many central banks room to ease policy to support their economies, though
there is a risk that oil prices will rebound. Indian CPI, which fell to a record low in November, has risen gradually since and was at 5.37%
in February. RBI is likely to be cautious easing interest rates further given uncertainties over oil prices, risk that unpredictable monsoon
could force food prices higher & possible capital outflows from India, once Fed raises rates, economists said.
CURRENCY
MARKETS
USD weakened further on Monday as it continues to feel carry-over
effects of a disappointing US jobs report that throws into question the
timing for US interest rate increase. Expectations the US Fed will raise
interest rates sometime later this year has fuelled USD's rally since
mid-2014. Higher US interest rates will put dollar-denominated assets
at a yield advantage versus other currencies such as euro and yen
where interest rates are being kept low. European markets remained
closed on Monday, limiting trading volumes and contributing to
narrow ranges. Euro held above $1.10 mark, but strategist sees USD
strength returning. USD traded modestly higher against yen at
119.08 yen, a rise of 0.11%. USD fell 0.2% against Canadian dollar at
C$1.2456, near bottom of its C$1.24 to C$1.28 range that has been
in place since the end of January.
1.19
Euro
1.18
1.16
1.15
1.13
1.12
1.10
OPEN: 1.0996
HIGH: 1.1035
LOW: 1.0966
CLOSE: 1.1027
1.09
1.07
1.06
1.04
COMMODITIES
Gold gained for a 2nd straight session to trade near a 3-week high
on Monday after US jobs rose at slowest pace in more than a year,
fuelling expectations the Fed could postpone an anticipated rate
increase. Gold was up 0.6% at $1,225 an ounce. A delay in first US
rate increase since 2006 would burnish gold's draw as a safe-haven
asset. USD could take a hit as investors push back rate hike bets,
making dollar-denominated gold cheaper for holders of other
currencies. Whether gold makes a renewed push for $1,300 - a
level it last touched in October would depend on the dollar's
movement, said experts. Other precious metals rose. Spot
palladium jumped 1.8% to $753.96 an ounce and platinum climbed
1.2% to $1,168.50 an ounce after hitting a 1-month high of
$1,177.50 earlier.
1400.00
Gold
1350.00
OPEN: 1215.23
HIGH: 1224.10
LOW: 1214.29
CLOSE: 1221.10
1300.00
1250.00
1200.00
1150.00
1100.00
I N D I A - BUSINESS & ECONOMICS
Finance Minister Jaitley on Monday said India was no so vulnerable that every legitimate tax demand will be waived. Tax authorities are
said to have served notices to FIIs over unpaid Minimum Alternative Tax (MAT) of previous years, triggering protests from overseas
investors. He said India was not a tax haven and that taxes that were payable by foreign investors should be paid, and others could be
challenged. FIIs will not have to pay MAT on their gains this financial year onwards as announced in Budget, but there is ambiguity on
whether FIIs are liable to pay MAT on gains of previous years. Estimates of aggregate MAT to be paid by FIIs vary between USD 5-8 bln,
according to media reports. On subject of black money stashed abroad, he said there would be a grace period for companies and
individuals to come clean on their overseas assets. Rather than wait to run into trouble and then say that targeting undisclosed income or
assets abroad is terrorism, it is in everybody’s interest that the rule of law is complied with. Therefore a reasonable window of compliance
would come,” he said.
India needs to proceed cautiously in fully opening up its debt markets to foreign investors, given the need to first tackle issues such as the
large government borrowing and capital controls, executive director Padmanabhan said in a speech last week. Padmanabhan also raised
concerns over the unhedged foreign currency exposure by Indian borrowers in offshore debt, saying it raised "systemic concerns." The
executive director, whose last day at the RBI is at the end of May, spoke at an Indian foreign exchange dealers' association meeting on
Friday. The speech was uploaded on Monday. Padmanabhan cited "structural frictions" in India's bond and currency markets, including
large government borrowings, as reasons that justified proceeding "in a non-disruptive manner" on removing debt limits for foreign
investors. Foreign investors can now buy up to $30 bln of government bonds and $50 bln of corporate bonds.
Sovereign Interest Rates (YTM in %)
8.10%
7.90%
7.70%
7.50%
3 mths 6 mths
1 yr
2 yrs
3 yrs
4 yrs
5 yrs
6 yrs
7 yrs
8 yrs
9 yrs
10 yrs 11 yrs 12 yrs 13 yrs 14 yrs 15 yrs 19 yrs 24 yrs 30 yrs
INDIAN
FINANCIAL
MARKETS
CURRENCY - INDIAN RUPEE
Indian rupee rose to a more-than-one-month high against the US 64.00
dollar amid a surge in foreign fund inflows that pushed up local
stocks. However, it gave up some of the gains as the central bank
bought the greenback to check the local currency’s gains. Rupee
closed at 62.18 to a dollar, highest since Mar. 5, compared with
62.50 at previous close. It rose to 62.07 in opening trade, but 62.50
pared the gains as state-run lenders, likely on behalf of RBI, bought
dollars in the spot market, dealers said. Local money markets were
shut from Apr. 1 for annual account closing, public holidays and
weekend. The 1-yr dollar-rupee forward premiums closed at
61.00
Rs.4.61, from the previous close of Rs.4.46.
OPEN: 62.13
HIGH: 62.23
LOW: 62.07
CLOSE: 62.18
INR
INDIAN EQUITIES
After a directionless trade, the market picked up momentum in last couple of hours of trade on Monday with the Sensex rising more than
270 pts intraday ahead of RBI policy. Healthcare and FMCG stocks led the market higher. The broader markets continued their
outperformance. BSE Sensex rose 244.32 pts or 0.86% to 28504.46 and NSE Nifty climbed 73.65 pts or 0.86% to 8659.90. The BSE
Midcap and Smallcap indices surged more than 1%. More than 2 shares advanced for every share declining on the Bombay Stock
Exchange. RBI Governor is unlikley to cut repo rates or CRR. Experts said governor Rajan was more likely to cut the SLR. The market will,
however, watch for his inflation expectations. Pharma stocks were in huge demand with the BSE Healthcare Index rising nearly 5%. In the
capital goods space, L&T rose over 1% on getting more orders worth Rs 5,492 cr in March. State-run power equipment maker BHEL added
1.4% despite weak flash results for FY15. The BSE Realty Index was the biggest gainer among sectoral indices, up 6.4%; HDIL rallied 24%
and Orbit Corporation jumped 15%.
Sensex Tracker
Nifty Tracker
9200
Sensex
Nifty
30000
9000
29250
8800
8600
28500
8400
OPEN: 28351.94
HIGH: 28530.81
LOW: 28221.99
CLOSE: 28504.46
27750
8000
27000
TECHNICAL
C U
C O
E
Q
OPEN: 8615.80
HIGH: 8667.55
LOW: 8573.75
CLOSE: 8659.90
8200
R R E
C I E
S
USD/INR
Resistance
62.46
GBP/USD
Resistance
1.5050
62.18
Support
62.00
1.4975
Support
1.4855
EUR/USD
Resistance
1.1109
USD/JPY
Resistance
120.01
1.1022
Support
1.0965
119.00
Support
118.27
M M O
U
N
LEVELS FOR THE DAY
D
I T
I E
S
G O L D($)
Resistance
1243
CRUDE
O I L ($)
Resistance
58.37
1221
Support
1191
57.63
Support
55.33
SENSEX
Resistance
28660
NIFTY
Resistance
8800
28504
Support
28240
8659
Support
8581
I T
I E
S
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