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Reuters
4 days ago
- Business
- Reuters
Rupee ends higher as rate-cut boost for equities blunts dollar strength
MUMBAI, June 6 (Reuters) - The Indian rupee strengthened modestly on Friday as the Reserve Bank of India's steepest rate cut in five years boosted local equities, helping the South Asian currency eke out a gain even as the dollar firmed against major peers. The rupee closed at 85.6250 against the U.S. dollar, up from its close at 85.79 in the previous session. The rupee declined 0.2% on the week. The Reserve Bank of India (RBI) cut its key repo rate by 50 basis points on Friday and slashed the cash reserve ratio (CRR) for banks as low inflation gave policymakers room to focus on supporting growth. India's benchmark equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, about 1% each on Friday, posting their best one-day gain in two weeks as the rate cut fuelled domestic growth expectations. India's benchmark 10-year bond whipsawed between gains and losses as traders digested the central bank's policy moves, including a shift in stance from 'accommodative' to 'neutral.' The yield on the benchmark paper was last quoted a tad higher at 6.2237%. Meanwhile, dollar-rupee forward premiums fell in reaction to the rate cut with the 1-year implied yield dropping 10 basis points to 1.81%. The Indian central bank's "larger-than-expected 50 bps rate cut and 100 bps cut in the cash reserve ratio should support INR," DBS said in a Friday note. "We will consider lowering USD/INR's forecast if the US Federal Reserve pivots towards a rate cut later this year and sets the stage for more USD weakness," the noted added. On the day, the dollar index was up 0.3% at 98.9 in the run-up to release of closely watched U.S. non-farm payrolls data which will offer cues on how the world's largest economy is faring in the face of trade policy spurred uncertainty.
Reuters
08-05-2025
- Business
- Reuters
India-Pakistan conflict pushes rupee to worst day in over two years
MUMBAI, May 8 (Reuters) - The Indian rupee weakened sharply to log its steepest fall in more than two years on Thursday as the ongoing India-Pakistan conflict hurt the currency alongside the country's bonds and equities. The rupee rose at the start of the session but weakened sharply after India said it had "neutralised" attempts by Pakistan to "engage" several military targets in its northern and western regions on Wednesday and early Thursday. Pakistan said it had shot down 25 Indian drones. India hit "terrorist infrastructure" in Pakistan in the early hours of Wednesday, two weeks after it accused the nation of involvement in an attack in Indian Kashmir in which 26 people were killed. Islamabad had denied the accusation and vowed to retaliate to India's missile strikes. Indian markets dropped following the latest statements from the two nuclear-armed neighbours. The rupee closed down 1% at 85.71 against the U.S. dollar, its worst day since February 2023, after hitting a low of 85.7625 during the session. Benchmark Indian equity indexes, the BSE Sensex (.BSESN), opens new tab and Nifty 50 (.NSEI), opens new tab, ended down 0.5% and 0.6%, respectively while the yield on India's benchmark bond rose nearly 7 basis points to 6.3983%. The rupee could continue to face pressure in the near-term and may fall towards 86.50, said Abhilash Koikkara, head of forex and rates at Nuvama Professional Clients Group. Panic dollar buying from importers could pick up, which would add to the headwinds, Koikkara said. Dollar-rupee forward premiums also jumped with the 1-year implied yield rising 16 basis points to a near one-month high of 2.34%. The rupee's 1-month implied volatility, a gauge of future expectations, rose to an over two-year high of 6.3%. "International investors undoubtedly evaluate geopolitical risk into their assessment of India, contributing to the rupee's underperformance," said Samsara Wang, Asian sovereign analyst in New York-headquartered PineBridge Investments' global emerging markets fixed income team. "That said, conflicts between India and Pakistan have not had a lasting effect on Indian financial assets, and the impact is likely to be limited and temporary.'
Reuters
29-04-2025
- Business
- Reuters
Longest foreign buying spree in nearly two years powers Indian markets
April 29 (Reuters) - Foreign investors extended their longest buying spree since July 2023 on Monday, fuelled by U.S. trade deal hopes, cheap corporate valuations, and India's relative resilience to global tensions, helping markets shrug off concerns over India-Pakistan frictions. Foreign portfolio investors (FPIs) pumped about $4.11 billion into Indian equities over the last nine sessions, lifting the benchmark Nifty 50 index (.NSEI), opens new tab by 6.6% for the period. The main reason for FPIs coming back into Indian markets is that the U.S. and China are more vulnerable to a global trade war than India, which is projected to still remain the fastest growing large economy in fiscal year 2026, said G Chokkalingam, founder and head of research at Equinomics Research. Markets have also shrugged off fears of an escalation in tensions between India and Pakistan after a deadly militant attack in Kashmir last week, which initially sapped risk sentiment. Analysts also said that expectations of a U.S.-India bilateral trade deal could attract further portfolio inflows the near term. U.S. Treasury Secretary Scott Bessent said on Monday that many top trading partners made "very good" tariff proposals, but one of the first deals to be signed would likely be with India, adding that a deal could be sealed as early as this week. Foreign interest in Indian shares is also being driven by attractive large-cap valuations and strong earnings from heavyweights like Reliance Industries ( opens new tab, alongside a tactical shift in flows between China, India, and the U.S., said Kranthi Bathini, director of equity strategy at Wealthmills Securities. The recent foreign buying in Indian shares follows sustained outflows worth $25.3 billion between October 2024 and March 2025 due to high valuations, moderating earnings, growth and global trade uncertainty. As of Monday's close, the Nifty traded 7.4% below all-time high levels hit on September 27, 2024. ($1 = 85.0940 Indian rupees)
Reuters
25-04-2025
- Business
- Reuters
Rupee drops; attempt to move past 85/USD blocked by Kashmir attack jitters
MUMBAI, April 25 (Reuters) - The Indian rupee yet again failed to move past the psychological 85 mark on Friday after a sell-off in local equities and bonds amid investors weighing the potential for increased geopolitical uncertainty following a deadly militant attack. The rupee , having peaked at 85.10 during the session, dropped to 85.6550 versus the U.S. dollar. This is the third time in recent days that the Indian currency has been driven back from the 85 level. India's Nifty 50 Index (.NSEI), opens new tab dropped over 1%, significantly underperforming other Asian equity indices, which followed their U.S. peers higher. The 84.90-85 level was always a tough barrier to break, and with the current drawdown in equities, it's understandable why USD/INR has seen a move higher, a currency trader at a bank said. He pointed out that Indian equities had largely ignored the Kashmir attack until now. That has changed and does not bode well for the rupee in the near term, he added. Indian bonds declined alongside equities, pushing the yield on the 10-year up by 4 basis points. INDIA-PAKISTAN STAND OFF India has said there were Pakistani elements in Tuesday's attack, when militants shot 26 men in a meadow in the Pahalgam area. Islamabad has denied any involvement. The nuclear-armed nations have unleashed a raft of measures against each other, with India keeping a critical river water-sharing treaty in abeyance and Pakistan closing its airspace to Indian airlines, among other steps. India's army chief will review security arrangements on Friday and visit the site of a deadly attack on tourists.
Reuters
23-04-2025
- Business
- Reuters
Top Indian funds bet on domestic sectors to lead market rebound amid global jitters
April 23 (Reuters) - India's top investment funds are pivoting inward, betting on the resilience of the domestic economy and a rebound in corporate earnings, while retreating from export-driven bets amid escalating global trade tensions. The NSE Nifty 50 index (.NSEI), opens new tab recovered from a tariff-driven slump earlier this month, turning positive for 2025 with a nearly 8% jump in just two weeks. However, it remains 8% below the record highs of September 27, weighed by muted earnings, record foreign outflows, and ongoing trade tensions. As global uncertainty persists, multiple fund managers said they remain cautious on sectors such as information technology, energy and commodities due to their exposure to global economic growth. Instead, fund houses are focusing capital on sectors seen as safer plays offering growth with less volatility. "We are focusing on companies with lower exposure to global trade risks, which are available in financials, consumer staples, consumer discretionary, defence and healthcare sectors," said Sanjay Bembalkar, head of equity at Union Asset Management Company, which manages $3.5 billion in assets. Financials (.NIFTYFIN), opens new tab have led the Nifty rally in 2025, rising more than 12% on expectations of further monetary easing and liquidity injections by the central bank. Consumer stocks (.NIFTYFMCG), opens new tab, hit hard earlier this year, have surged about 13% since the start of March, with fund managers expecting the government's income tax cuts and the Reserve Bank of India's rate reductions to boost demand. Consumer heavyweights such as Hindustan Unilever ( opens new tab, ITC ( opens new tab, and Nestle ( opens new tab gained between 9% and 11% since the beginning of March and were among the top gainers in benchmark indexes over the period. "Accordingly, we have increased exposure to retail, pharma, and financials over the last six months," said Shreyash Devalkar, Head – Equity at Axis Mutual Fund, which manages about $150 billion across 16 schemes. "Relatively low-growth, substantially redacted sectors might do well," he added. LARGE-CAP APPEAL India's goods exports have slowed in recent months, reflecting weaker industrial activity. Services exports have also faltered, with February and March posting declines. The ongoing U.S.-China trade war continues to heighten global economic fears, despite a temporary pause in tariffs. With markets expected to remain volatile, fund houses are preferring to stick to large-cap stocks. Small- (.NIFSMCP100), opens new tab and mid-caps (.NIFMDCP100), opens new tab have gained about 15% and 13.5%, respectively, since the beginning of March, but they are still trading 14.5% and 10% below their record high levels. "Large-caps are relatively more appealing than they were in September 2024, and opting for large-caps mutual funds is a prudent strategy," said S Naren of ICICI Prudential AMC, which manages assets worth about $210 billion. Life Insurance Corporation (LIC) Mutual Fund, managing assets worth about $5 billion, says the fund has turned more constructive on large-cap financials, capital goods, and infrastructure-linked firms. "This isn't a market where you can go all in, but it's a good time to start nibbling selectively," said co-CIO Nikhil Rungta. He noted the fund has maintained a 3%-4.5% cash buffer across portfolios to take advantage of market dips. Despite the lingering risks due to tariffs and potential global growth slowdown, India is well-positioned since it is largely a domestic-driven economy, according to Naren. ($1 = 85.4050 Indian rupees)
