Indian Rupee: Post RBI policy Review impact on market & key aspects of May Trade data.

This is in continuation of our June monthly report bit.ly/11FPpaX which is reviewed today after RBI policy review announcement. 

The Reserve Bank of India (RBI) in its June mid quarter monetary policy review on Monday left its key policy (repo) rate unchanged at 7.25 percent in line with expectation. Cash reserve ratio (CRR) remained at 4 percent. "It is only a durable receding of inflation that will open up the space for monetary policy to continue to address risks to growth," the RBI said in its release. RBI's key concern is the high food inflation, which has not been declining in line with the non-food and WPI inflation. Foreign fund flows into Indian equities too have slowed down considerably over the last month. Cutting interest rates when the rupee is falling could further make the currency unattractive to foreign investors. Federal Open Market Committee (FOMC), the US Federal Reserve's policymaking body, is meeting on June 19. Everybody from equity, bond, and currency markets is keeping an eye on this. So, is the RBI, which is also expected to take cues for its April-June quarter policy to be announced in July. Speculation of a possible cutback in the US Federal Reserve’s monetary stimulus has already raised fears of liquidity flows into emerging markets like India slowing down. The fears, if proved true, could have serious repercussions for countries like India, which are heavily reliant on foreign capital flows to bridge their current account deficit. In a separate statement from Commerce secy on May trade data the key points are :

• Trade data for May released today showed the country's exports at $24.51 billion versus $24.16 billion on month.
• Imports in the same month stood at $44.65 billion versus $41.95, up 7% from a month ago.
• Oil imports in May at $15 billion versus $14.1 billion compared to month ago period.
• Trade deficit for the country was at $20.14 billion versus $17.8 (month-on-month).
• May gold and silver imports stool at $8.3 billion versus $7.5 billion (month-on-month)
  Gold and silver imports are responsible for high trade deficit, the Commerce Secretary said today.
• Textile exports are doing well, he said, while engineering exports are seem to be improving, he said.

June Trade data is expected to be on positive side as key measures taken on gold import front will help to ease the trade deficit in June. Evidence suggests a moderation in gold imports could be underway in June after gold trading in SEZs has been stopped and import curb on gold implemented on consignment basis. As per new guidelines gold import can be done on 100% cash basis. In a separate development, DIPP may push for 100% FDI in defence production and govt allows 100% FDI in mobile tower business. These steps will help in short to medium term in rupee. However June19th will be very crucial date for market as FED announcement will pan out further development on QE programme. 

On technical chart by & large Rupee is most likely to remain slightly bearish with mild correction up to 56.50 for rest of the month. Rising parabolic SAR stopped out at 57.40 on USDINR pair suggests any momentum shift on rupee appreciation will be based on how Rupee closes above 57.40 levels on two consecutive sessions for touching any level around 56.50. Any appreciation in Rupee for this month above 56.50 is dim; however any announcement or steps taken from govt may ease pressure on rupee.  In a very extreme conditions Rupee may retest its all time low at 58.98 or breach it further. On chart 58.40 is strong support for rupee to hold and 58.67 crucial levels for rupee to stay above this level. Any breach of 58.67 may open further weakness in rupee which may results in touching all time low. Range for next 9 trading session 56.95-58.57.

 

With Inputs from Moneycontrol & RBI press statement, complied by Amit Daga.

A disclaimer: Read the Disclaimer in earlier posts. This post is for information purpose only and not advising any individual or organization on taking any trading decision. The blogger may or may not have any personal interest in the above said the report.

Don’t blame Advani, it is our social structure which needs to be blamed, not NAMO.

In  summer of 2002 exactly 11 years ago Advani&Modi these two names were in circulation at the Goa meeting along with ABV. Advani has secured Modi head by courting leading vocal voice of Pramod Mahajan in favor of Modi. And Modi after that never looks back into the party or state leadership. Circle of time is very rigid & unusual sometime. Two names are same but the situation is very different in ongoing BJP national executive meeting in Goa. As per all media reports/breaking news/sources Advani is not happy with Modi elevation as top leader or contender to the 2014 general election and prospective PM candidate. Many in political circles is terming this as his dream or aspiration to become PM himself as I pointed here http://t.co/Fh7GR5UaMe  last week . But does this all is the real answers to our never ending thrust to speculate and do analysis based on what suits our ideology and leniency.

Image Courtesy : Google Image.

Advani is a stalwart leader and literally a Patron for a party, Bhism Pitamah & elder are few synonymous words of Advani. So what exactly makes him so rebel to his own party and denying the fact that Modi is the most popular leader in party and largely acceptable to BJP core voters? In our society elders become baggage as phases of time and young generation become too unrest to hear the advice of the elder generation, In India most of the business houses have ‘Chairman’ of a company as a founder or an eldest person in a family tree and a CEO/MD who actually run the show, even in our family discourse elders are merely a symbolic individuals whose larger roles or importance are diminishing day by day. BJP is facing the same problem at the current juncture, it could have avoided this if in a phased manner the leadership shifted from older to younger generation after its debacle in the 2004 election, but it never took a chance of a possible bean spill among second lines of leader, in that due course it keeps the issue hanging and try to cook the recipe under its tree. Advani oppose to Modi is not only political but also ideological, BJP discredits to his work and contribution to the party is making Advani relentless , he can never distance himself from the party or Sangh. But this time it is also a fight b/w Sangh dominance and BJP existence, by projecting Shivraj over Modi Advani try to pitch his dominance and diluting the role of the Sangh in BJP internal matter over who will lead the party. BJP lost a chance to distance itself from Sangh, although the party owns all & lots to Sangh for its very existence. But being a father is different to being a guide.

This class is more about the system in which we live, we like to name our older generation gave them token respect but never wants to hear them, or instead move on our own course. But Change is vital for our existence, but the question is at what cost. Advani is the tallest leader with no larger ground support; his courtier also has limited reach to people when it matters. BJP could well manage by crediting his due and importance in the party and ask him not to contest next Lok Sabha Election and indeed stand like a Bhism Pitamah to party and with his blessing Modi nominated as next PM candidate. It could also reject the rumors of any political split in the party and the party can prepare itself for better campaign and provide enough resistance to UPA govt. But our social structure is webbed in such a harsh reality it never gives the required dues to its elder and takes its own course of future. Since the BJP is undoubtedly more democratic political party it is paying the cost in our ill-rotten feudal& autocratic political dynastic system.

I allow taking some lines from my tweets.

"अडवाणी बनाम मोदी सिर्फ विचार की ही नहीं अपतु एक ऐसे संघर्ष की लड़ाई है जिसमे बुजुर्ग अपनी विरासत का हिसाब मांगता है दूसरा सत्ता  की चाबी और बहुत हद तक हमने अपने अपने परिपेक्ष में जो हम हमेशा करते आये हैं,इस संघर्ष को व्यक्तिगत कर दिया जबकि यह सिर्फ दो युगों का द्वंद है"

Don’t blame Advani it’s our basic character of society.

The writer can be reached at amitdaga.gwl@gmail.com