Rupee declines 16 at 64.96 against US dollar

Snapping its four-day rising streak, the rupee fell 16 paise to 64.96 against the dollar in early trade due to fresh dollar demand from importers.

Besides, a weak opening in the domestic equity market put pressure, dealers said.

A weakness in the US dollar against major world currencies in the global market, however, limited the rupee fall, they said.

The domestic currency had gained 1 paisa to close at 64.80 in the previous session on selling of dollars by banks and exporters in view of a firm trend in the stock market.

Meanwhile, the benchmark BSE Sensex fell 27.97 points, or 0.10 per cent, to 27,336.95 in early trade today.

'India to see slow recovery amid global woes, rate cut delays'

Indian economy is likely to witness a slow recovery largely due delay in two factors - global revival and lending rate cuts at the domestic front, says a Bank of America Merrill lynch report.

According to the global financial services major, notwithstanding a far more politically stronger government, recovery in the Indian economy would be driven by global turnaround.

"We continue to caution investors about a slow recovery due to twin delays in global recovery as well as lending rate cuts at home," BofA-ML said in a research note.

The recovery in Indian economy is likely to be driven by a pick-up in consumption in the next 12 months, it added.

The global brokerage firm said that the coming months could see a consumption recovery largely driven by four factors - softer lending rates, public sector salary hikes after the 7th Pay Commission, household savings on lower oil prices and a possible hike in wheat MSP before the early-2017 Punjab/UP polls.

The report noted that lending rate cuts rather than reforms will drive cyclical recovery as reforms typically take 5-10 years to push up growth structurally.

Meanwhile, BofA-ML has also trimmed its growth forecast for India to 5.5 per cent from 6 per cent for the current fiscal, as per the old GDP series.

According to the old series, the base year for calculation of national accounts was 2004-05.

The Central Statistics Office (CSO) has now adopted the new series of National Accounts with 2011-12 as base year and subsequently revised the Gross Domestic Product (GDP) growth rate to 6.9 per cent in 2013-14 from 4.7 per cent and 5.1 per cent in 2012-13 from 4.5 per cent.

The April-June quarter GDP slipped to 7 per cent from 7.5 per cent in the preceding quarter.  

Mid, smallcaps in favour today.

After trading range bound for the majority of the day, Indian equity markets closed on a weak note as selling activity intensified in the final hour of trade. Stocks across the board ended on a mixed note with those from the IT, powerand consumer durables' space leading the gains; while metal, realty and oil and gas stocks were not in favour.Vedanta turned out to be the biggest loser today. The BSE-Sensex slipped and closed down by about 58 points while the NSE-Nifty closed down by 14 points. On the other hand, the S&P BSE Midcap and the S&P BSE Smallcap indices closed on a firm note and were up by 0.5% and 0.2% respectively.

Asian markets ended mixed. The Shanghai Composite gained 1.14% and the Nikkei 225 rose 0.42%. The Hang Seng lost 0.37%. European markets opened weak with France leading the downfall. The rupee was trading weak at 64.89 against the US$ in the afternoon session.

According to a leading financial daily, HCL Technologies (HCL) has entered into a Letter of Intent with the Volvo Group for undertaking an outsourcing engagement for its IT infrastructure and operations services. Reportedly, the total contract period is for a length of five years. In addition, HCL would be acquiring from the Volvo Group, its external IT business relating to provision of IT infrastructure, mainframe services and application operation services for an all cash consideration of Swedish Krona (SEK) 1.1 bn (US$138 million). Volvo Group derived revenue of SEK 1.6 bn (US$ 190 million) from external customers during last twelve months.

While all of the IT majors have outperformed the Indian benchmark in the first nine months of 2015, HCL Tech has outperformed its peers. The underperformer has been TCS whose stock has barely moved, though it has managed to do better than the Sensex.

Mining stocks languished in red today with Vedanta Ltd and NMDC Ltd bearing majority of the brunt. According to a leading economic daily, Vedanta Ltd is eying to achieve its target of 5.5 million tonnes (MT) iron ore exports by March next year as it prepares to bid for ore in government run auctions. The company's iron ore division is expecting to mine 5.5MT of fresh iron ore from its mines in Goa. Goa still has about 5 MT of already-mined iron ore to be sold in auctions. The low grade ore is not used by domestic steel makers, and most of it will be exported by March 2016.

Reportedly, Vedanta is in the process of shipping 88,000 tonnes of the steelmaking ingredient to China, with other customers there eager for cargoes. Vedanta bought the iron ore being shipped to China in state auctions in the past month and hopes to purchase more. The scrip of Vedanta closed the trading day down by 6.4% on the BSE.