1) Part of the oil companies' demand for the dollar may be coming back to the forex market. The RBI had opened a special swap window with the oil marketing companies in July to support the rupee when it was on a free fall hitting life-lows daily. This arrangement had taken off daily demand for $500 million from the forex market. RBI Governor Raghuram Rajan recently indicated that this demand will have to return , so the RBI is unlikely to step in now. And the rupee may depreciate a little more now.
2) US job growth unexpectedly accelerated in October as employers shrugged off a partial government shutdown, suggesting the economy was on firm footing and raising the prospect the Federal Reserve may soon decide to temper its bond-buying stimulus.
3) Though there has been a let up in the current account deficit situation of the country, the government has not addressed the structural worries fully. For example, the finance minister has drawn a red line on the fiscal deficit. He has been reiterating it will not cross the budgeted 4.8 percent of GDP but is yet to explain how he is going to attain this. The deficit during April-September stood at Rs 4.12 lakh crore, which is 76 percent of the full-year target. Investors are worried that there are five more months to close the financial year. So the worries over the fundamentals remain.
4) Another major worry is the inflation. Projections are that the inflation rates, both retail and wholesale, are likely to go up further because the unrelenting rise in food prices. Higher inflation means higher interest rates. FIIs would not want to stay invested in the Indian bond market in such a situation. They are exiting Indian debt even as they are increasing their exposure to equities. During Novermber 1-8, FIIs net bought Rs 2,958 crore of Indian shares, while they have sold Rs 2,916 crore of bonds.
5) Last but not least is the impending closure of the swap facilities opened by the RBI. There are two of them: one for the oil companies (explained earlier) and the second for banks. Banks are being offered this facility in order to encourage them to raise dollar deposits from the non-residents. As per this arrangement, the RBI is allowing the banks to swap their dollar for rupee at a cheaper rate. Both the facilities will be open until this month end. Once they close, the dollar inflow through these windows, which the RBI has said is $12 billion as of 25 October, will stop
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2) US job growth unexpectedly accelerated in October as employers shrugged off a partial government shutdown, suggesting the economy was on firm footing and raising the prospect the Federal Reserve may soon decide to temper its bond-buying stimulus.
3) Though there has been a let up in the current account deficit situation of the country, the government has not addressed the structural worries fully. For example, the finance minister has drawn a red line on the fiscal deficit. He has been reiterating it will not cross the budgeted 4.8 percent of GDP but is yet to explain how he is going to attain this. The deficit during April-September stood at Rs 4.12 lakh crore, which is 76 percent of the full-year target. Investors are worried that there are five more months to close the financial year. So the worries over the fundamentals remain.
4) Another major worry is the inflation. Projections are that the inflation rates, both retail and wholesale, are likely to go up further because the unrelenting rise in food prices. Higher inflation means higher interest rates. FIIs would not want to stay invested in the Indian bond market in such a situation. They are exiting Indian debt even as they are increasing their exposure to equities. During Novermber 1-8, FIIs net bought Rs 2,958 crore of Indian shares, while they have sold Rs 2,916 crore of bonds.
5) Last but not least is the impending closure of the swap facilities opened by the RBI. There are two of them: one for the oil companies (explained earlier) and the second for banks. Banks are being offered this facility in order to encourage them to raise dollar deposits from the non-residents. As per this arrangement, the RBI is allowing the banks to swap their dollar for rupee at a cheaper rate. Both the facilities will be open until this month end. Once they close, the dollar inflow through these windows, which the RBI has said is $12 billion as of 25 October, will stop
WHAT EVER YOU EARN FROM MY CALLS PLEASE GIVE 10% PROFIT'S FOOD TO COWS AND DOGS HELP THM GOD WILL HELP YOU-!!!
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