QBiz: Rupee May Touch 70 a Dollar by December & More

Here are the top headlines from the world of business.

A Business Standard poll of 10 currency experts, bank treasurers, and economists predict the rupee to be almost touching 70 a dollar by December.

(Photo: iStock)

1. Rupee May Touch 70 a Dollar by December: BS Poll

In a world getting rapidly sucked into a currency war vortex, India seems to be offering some stability, thanks to the relatively low export dependence of the economy and a country that is more inward-looking than others for its economic activities. But that does not mean a full-blown currency war will not affect the rupee.

If China’s currency devalues, there will be adjustments by other currencies including the Indian rupee, in the region. A Business Standard poll of 10 currency experts, bank treasurers, and economists predict the rupee to be almost touching 70 a dollar by December.

(Source: Business Standard)

2. RBI Industrial Outlook Survey: No Good News for Manufacturing

The Reserve Bank of India’s (RBI’s) industrial outlook survey for the manufacturing sector indicates that business expectations have been falling for the past two quarters.

The chart shows that the Business Expectations Index, or BEI, for the quarter ahead fell from 115.8 for the March 2018 quarter to 114.1 for the June 2018 quarter.

The Business Expectations Index is a composite indicator calculated as a weighted (share of gross value added, or GVA, of different industry groups) net response of nine business indicators: (1) overall business situation; (2) production; (3) order books; (4) inventory of raw material; (5) inventory of finished goods; (6) profit margins; (7) employment; (8) exports, and (9) capacity utilization.

(Source: Livemint)

3. Teamwork Between NBFCS & Banks a Boon for Small Borrowers

The Reserve Bank of India (RBI) has proposed that banks meet their priority sector lending targets through co-origination of loans with non-banking finance companies (NBFCs). Rather than hold on to the convenience of lending to micro lenders and other NBFCs who in turn would give loans to small borrowers, the central bank believes banks should directly underwrite loans along with other lenders to meet their priority sector requirements.

In short, attend to the customer together rather than just pay your way to get the label of a small-borrower-friendly bank.

To the extent that this arrangement would bring the much-needed heft of deposit-taking banks in bringing down costs to the end borrower, it is indeed a win-win proposal.

(Source: Livemint)

4. Automobile Industry Planning Rs 58,000 Crore Capex in 2 Years

Auto makers in India are set to spend up to Rs 58,000 crore in capital expenditure (capex) over the next two years – the highest in a decade – underscoring healthy demand prospects in the local market and impending safety and emission norms.

The figure will mark a 30 percent jump from the previous two comparative fiscal years, ratings agency Crisil said in a June report.

The ratings agency studied investment plans at 18 auto makers, who comprise about 90 percent of total industry volume. The auto makers are ramping up investments on new products and capacity to tap growing demand. They also need to make their vehicles compliant with new safety and emission norms which will come into force over the next two to three years.

(Source: Livemint)

5. Pidilite Sees GST-Driven Market Share Gains in Q1, but Positives Fully Priced In

Adhesives and sealants maker Pidilite Industries Ltd gained market share in the June quarter, courtesy the goods and services tax (GST)-led shift from the unorganised to the organised sector.

In a post-earnings conference call, the company’s management said the demand environment is gradually improving. It aims to achieve 14-15 percent volume growth in the consumer and bazaar (C&B) segment, a key contributor to revenue, in this fiscal year.

Though the accurate market size is unavailable, the management pegged Pidilite’s share in the C&B business at around 50-60 percent. In the June quarter, it achieved 20 percent year-on-year volume growth in the C&B segment and 7 percent y-o-y growth in industrial business.

Apart from Titan Industries Ltd, Pidilite is the only company that is witnessing a GST-driven demand shift, analysts said.

(Source: Livemint)

6. SEBI in Final Stages of Allowing Futures Trading in Petrol and Diesel

Over 60,000 retail petrol pump and hundreds and thousands of small and big transporters, bulk users and diesel-consuming industries will soon be able to hedge the price risk in petrol and diesel, as SEBI is in final stages of allowing futures in these two commodities.

Sanjit Prasad, MD & CEO of Indian Commodity Exchange (ICEX), sais, “In the Commodity derivatives market today, there is a paucity of serious hedgers participating from across the country due to basis risk. Our proposed contracts for petrol and diesel have been designed to eliminate basis risk for participants or hedgers anywhere in the country. It will be the first truly One India-One Market-One Contract product.”

(Source: Business Standard)

7. Zipgo in Talks to Raise Funding from Essel Group

Bus aggregator ZipGo Technologies Pvt Ltd is in advanced talks to raise $50 million from Essel Group, a person familiar with the matter said. ZipGo wants fresh capital to grow its presence in India from the current 10 cities, the person who didn’t wish to be named told Mint.

The Bengaluru-based company will also use the funds to offer bookings for electric buses and e-rickshaws, the person said. ZipGo declined to comment. Essel Group also didn’t respond to an email seeking comment.

Essel Group, founded by Subhash Chandra, is present in areas including media, entertainment, packaging and technology. The company wants to invest in ZipGo as part of its push toward building infrastructure for electric vehicles, the person cited above said.

(Source: Livemint)

8. Nifty May Witness Some Consolidation, Avoid Aggressive Purchases

Contrary to what was expected, the Friday’s session remained quite a stable one and the benchmark index Nifty50 saw a one-way upsurge.

The index ended the day with gains of 116.10 points or 1.03 percent. With absence of volatility in the Friday’s trade, the India VIX ended at fresh low at 12.0775 losing 3.80 percent.

The up-move remained across the board as all broader indices and the sector indices ended with gains.

As we approach fresh week beginning Monday, though we expect a positive start to the trade, Nifty is staring at some imminent consolidation at higher levels. Though we may see market advancing gains and inching higher towards higher levels, at any point, we may be faced with rangebound consolidation and some profit taking from higher levels.

(Source: The Economic Times)