The Indian Rupee finally gave in to the teetering topsy turvy state of the confidence in the economy when the day’s equity gains were not all carried into the closing and the currency went rooting for 54 levels at 1430 hrs , and now moves on to 54.1 toward the 5 pm close.
MCX has received 700 applications for the equities segment that is tentatively launching before Diwali which would make clear signals for the concurrency between currency and Fixed income segments with equities quite germaine to the markets as the commodities experts have had considerable depth in Rupee rate discovery and providing a window for Crude Oil prices amongst other important commpodities like Cotton and Gold where India’s global following is also germaine.
Exporters like Tata Coffee who are ramping up on their global sourcing commitments for Coffee and corporate Houses and exporters like Bharti Airtel and Bajaj Auto also could be supported in new FDI requests (outward) and add to the depth of the global Rupee trade which is yet limited in retail driven by excessive dollar speculation and yet dependent on key Oil and European and Chinese export volumes.
The growing interest in Indian equities and Currency could be supported if measures to improve depth in the local Fixed ioncome/Gilt markets bear fruit as the RBI starts with consolidating various 10 year issues. Indian Bank CDS suffer from illiquidity despite the investors’ knowledge of the ‘real’ investment grade rating of our banks as they get stymied by the triggers in the local currency and much more mature equities segments even as they load up on bank and infra QIPs from India. SBI trades at 220 bps and even ICICIBANK trades at 160 bps in the CDS market ( $160000 to insure $10 million of debt)