Rupee jumps to one-month high on strong RBI macro view

 The rupee staged a solid recovery against the US dollar Tuesday by rising 16 paise to end at 67.02, its highest highest level in a month, on heavy selling of the greenback by exporters and banks.

A massive rally in domestic equities along with smooth supply of dollars on the back sustained capital inflows into equities and debt predominantly helped the upmove.

Bullish comments from RBI that near-term outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 percent in 2016-17, further bolstered sentiment, a forex dealer said.

The gross domestic product (GDP) data for the June quarter and fiscal deficit data for July will be released tomorrow.

In the meantime, the US dollar maintained its bullish momentum to hit a two-week high against other major trading counterparts on buoyant expectations of a Federal Reserve rate rise in the midst of hawkish comments from Fed chair Janet Yellen.

The home currency opened higher at 67.13 from yesterday's closing value of 67.18 at the Interbank Foreign Exchange (forex) market and continued its ascend to close with a solid 16 paise gain, or 0.24 percent at 67.02 - the level not seen since July 29 this year.

It had lost 12 paise to close at near one-week low of 67.18 yesterday against the dollar.

The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.25 percent at 95.78 in early trade.

Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 286.52 crore yesterday, as per provisional data released by the stock exchanges.

The RBI fixed the reference rate for the dollar at 67.0879 and euro at 74.9439.

In cross-currency trade, the rupee strengthened further against the euro to end at 74.84 from 75.04 and also firmed up against the Japanese yen to finish at 65.48 compared to 65.73 per 100 yens.

However, the home unit held virtually steady against the pound sterling at 87.83. 

Meanwhile, Indian financial markets witnessed a massive buying spree amid a global rally, lifting key benchmark indices to multi-month high.

The benchmark BSE Sensex zoomed 440.35 points to end at 28,343.01 while the broader Nifty soared 136.90 points to close at 8,744.35.

In the forward market, premium for dollar showed easy to modestly firm trend.

The benchmark six-month premium for January softened to 163-165 paise from 163.5-165.5 paise, while the forward July 2017 contract inched up to 355-357 paise from 354.5-356.5 paise yesterday.

Crude prices edged higher today supported by production suspensions in the US Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices.

Market rally continues, Nifty breaches 8,800-mark

Stock markets continued their winning run for the third straight session, with theNSE Nifty reclaiming the psychological 8,800 level after 16 months and BSE Sensex rising over 131 points in early trade today on widespread gains amid sustained foreign fund inflows.

The National Stock Exchange's index Nifty surged by 55.90 points, or 0.63 percent to, 8,800.25.

While, the 30-share Sensex surged by 131.37 points, or 0.46 percent, to 28,474.38 points in early trade.

The gauge had gained 560.76 points in the previous two sessions.

All the sectoral indices, led by realty, banking and healthcare were trading in the positive zone with gains up to 1.08 percent.

Brokers said sentiment was largely bolstered on sustained foreign fund inflows and persistent buying by domestic financial institutions as well as retail investors.

Besides, a firming trend at other Asian markets boosted sentiment, they said.

Japan's Nikkei moved up by 0.79 percent, Shanghai Composite Index rose 0.18 percent in early trade today. Hong Kong's Hang Seng was slightly up.

The US Dow Jones Industrial Average, however, ended 0.26 percent down in yesterday's trade.

SEBI mulling relaxed norms for REITs, InvITs, startups listing

To make domestic capital markets more attractive, regulator Sebi has lined up wide-ranging relaxations to its norms for REITs and InvITs and an easier set of listing rules for startups.

Several attempts are being made to garner due attention from business houses in the country but all the efforts failed leading to Sebi reconsidering the proposal to give further relaxations.

The Securities and Exchange Board of India (Sebi) will consider these regulations in its board meeting next month, according to sources.

A consultation process is already underway for making the InvITs(Infrastructure Investment Trusts), REITs (Real Estate Investment Trusts) Regulations and to review the framework for Institutional Trading Platform (ITP) for startups.

Sebi had notified the REIT and InvIT Regulations in 2014, allowing setting up and listing of such Trusts, which are very popular in some advanced markets.

However, no single Trust has been set up as yet as investors wanted further measures, including tax breaks, to make these instruments more attractive.

While the government provided for certain tax benefits in the Budget this year, Sebi has now decided to further relax the rules.

Sebi's board is expected to consider an easier set of norms on REITs and InvITs. It may allow the REITs and InvITs to have up to five sponsors, as against the current norm for maximum three.

Under the proposal for REITs, Sebi would allow up to 20 percent investment by such trusts in under-construction projects, up from a maximum of 10 percent allowed currently.

Besides, relaxations would be made to provisions relating to compliance of minimum public holding norms, as also for investments by the associate entities of the trustees.

Sebi also proposed to rationalise the requirements under the Related Party Transactions, under which approval of 60 percent unitholders apart from related parties, is required for passing a related party transaction.

Further, approval is required of 75 percent unitholders, apart from related parties, for passing special resolutions such as change in investment manager, investment strategy and delisting of units.

Under the proposal for InvITs, Sebi may allow such trusts to invest in two-level SPV (special purpose vehicle).

The regulator plans to remove the restriction on the SPV to invest in other SPVs, thus allowing InvIT to invest in a holding company which subsequently holds stake in SPVs.

Currently, InvIT holds a controlling stake in SPVs that do not invest in other SPVs. Besides, it is proposed to reduce the mandatory sponsor
holding in InvIT to 10 percent of the total units of such units on a post-issue basis for a period of three years, from the current requirement of 25 per cent.

The current requirement may limit monetisation for sponsors and reduce release of capital for them. Further, in certain circumstances, it may lead to sponsors putting money out of their own pocket in the InvIT to maintain the required 25 percent stake.

Regarding startups, Sebi plans changes to the framework of Institutional Trading Platform (ITP), which has not seen much traction even though it was put in place in August 2015. Not a single startup has been listed on this platform till date.

The valuation concern has also discouraged startups for listing on the platform.

The rules were brought in to encourage Indian startups and entrepreneurs to remain within the country rather than go overseas for raising funds.

Sebi would consider an easier framework that allows more investor categories, relaxed shareholding norms and reduced trading lot amount.  

Sensex extends losses for 3rd straight session on US rate hike concerns.

Weakening for the third straight session, the benchmark BSE Sensex fell over 60 points in early trade Monday on sustained selling by investors, who seem to be edgy amid rising prospects of US interest rate hike this year.

The BSE 30-share barometer declined by 60.39 points, or 0.21 percent, to 27,721.86 with teck, realty, IT, healthare, capital goods and power were trading in negative zone, falling up to 0.90 percent. It had lost 274.69 points in the previous two sessions.

Also, the NSE Nifty was trading down by 11.10 points, or 0.13 percent, at 8,561.45.

Brokers said that apart from continuous selling by investors, a mixed trend at other Asian markets with US Fed chief Janet Yellen suggesting that interest rates could be raised this year also added to the weakening sentiment.

Japan's Nikkei was up 2.24 percent while Hong Kong's Hang Seng fell 0.33 percent in early trade today. The Shanghai Composite Index edged up by 0.04 percent.

The US Dow Jones Industrial Average ended 0.29 percent lower in Friday's trade.

Retail investors no longer fancy smallcaps; top 10 stocks that are seeing mass desertion

Retail investors have been busy dumping smallcap stocks after some of them gained up to 47 per cent in last one year. This category of investors reduced their holdings in 671 companies in last one year but increased in 767 others, said a report compiled by Prime Database.

Top ten stocks that saw a drop in retail holdings in double digits during the quarter ended June 30 included Ashima, Shree RamaBSE -3.36 % Newsprint, MIC ElectronicsBSE -1.31 %, Alankit, Rajrayon Industries, Gujarat NRE CokeBSE -0.32 %, PolarisBSE 0.85 % Consulting, Orient AbrasivesBSE -0.67 %, Sujana Metal ProductsBSE 2.53 % and Future Enterprises.

"At an aggregate level, it may be true that the exits are happening in stocks that rose too fast too much, which enticed retail investors to exit at the best prices available. But those very stocks had indeed seen turnarounds to figure on the charts of top yearly gainers," Jimeet Modi, CEO, SAMCO Securities, told ETMarkets.com.

Forex reserve at record high of $367.169 billion

 The country's foreign exchange reserves increased by a healthy USD 1.346 billion to touch a record high of USD 367.169 billion in the week to August 19 mainly due to a rise in foreign currency assets (FCAs).

Last week, the reserves had shot up by USD 73.2 million to USD 365.822 billion.

FCAs, a major component of the overall reserves, rose by USD 1.315 billion to USD 341.675 billion, the Reserve Bank said today.

FCAs, expressed in dollar terms, include the effect of appreciation/depreciation of non-US currencies such as euro, pound and yen held in the reserves.

Gold reserves remained unchanged at USD 21.584 billion.

The country's special drawing rights with International Monetary Fund increased by USD 11.8 million to USD 1.497 billion, while the reserve position was up by USD 19.2 million to USD 2.411 billion, RBI said.

Gold smuggling: Government loses over $1 billion in revenue

Indian gold refiners just months ago were ramping up capacity and struggling to secure enough ore from miners. Now, they are suspending operations as a surge in smuggled bullion wipes out wafer thin margins.

Gold importing banks and big jewellers have also been hit by the growing entry of illicit gold, which avoids import duties and makes its way on to the so-called "grey market" where it is sold to end-users at a discount.

Smuggled gold could account for more than a third of demand this year in India - the world`s second-biggest buyer of the metal after China - potentially costing the government over USD 1 billion in lost revenue.

The upsurge will lead to pressure for a reduction in the 10 percent import duty and a rethink on recently introduced levies on gold jewellery, which critics say are boosting the unofficial trade the government has been trying to curb.

"Gold refiners have less than a 1 percent margin. If smugglers offer 4 or 5 percent discounts, then we have no choice but to close our operations," James Jose, secretary of the Association of Gold Refineries and Mints told Reuters.

All 32 refineries in the country have stopped buying dore - a semi-pure alloy made by miners - in the past few months and are relying on treating scrap gold until market conditions normalise, he said.

"Last fiscal year we refined 120 tonnes of gold. With local scrap supplies we can produce 20 tonnes of refined gold in the current year," said Rajesh Khosla, managing director of MMTC-PAMP India, the country`s biggest refinery.

SMUGGLING GROWS

India raised the duty on gold imports to 10 percent three years ago, aiming to dampen buying and narrow the current account deficit in a country where gold is seen as a store of wealth for rich and poor alike.

Smugglers evade the duty and offer cheap gold to buyers such as bullion dealers and small jewellers, who can pay up to USD 100 an ounce below official domestic prices, currently around USD 1,340 an ounce.

Falling gold prices deterred the illicit trade last year but smuggling has surged in recent months amid rising prices and the reintroduction in March of a 1 percent local sales tax on gold jewellery.

Smuggled gold into India could double to as much as 300 tonnes in 2016, said Bachhraj Bamalwa, director at All India Gems and Jewellery Trade Federation, although the World Gold Council (WGC) has put the figure at 160 tonnes. At 300 tonnes, the government would forego about USD 1.3 billion at current gold prices.

The new sales tax has encouraged smaller jewellers in particular to buy on the grey market, said Somasundaram PR, managing director of the WGCs` Indian operations. The jewellery must be sold without receipts, but goes to customers looking to hide funds from the authorities.

The finance ministry did not respond to requests for comment on gold smuggling.

BANKS HIT

The legal trade is also facing headwinds from a 26 percent rise in the gold price this year which has discouraged overall buying and made smuggled gold available at deep discounts.

India`s official gold imports fell 57 percent in the first seven months of 2016 to 215 tonnes, and could fall more than 60 percent for the year to 350 tonnes to 400 tonnes, the lowest level in two decades, said Sunil Kashyap, managing director, Global Banking and Markets at Scotiabank.

Banks, which until last year were the main source of gold supply, are losing their market share quickly.

"Since there were hefty discounts in the grey market, consumers shifted from banks to grey markets," Arindam Sarkar, senior vice president at Axis Bank, the biggest bullion importing bank in the country, told Reuters.

"So far in 2016 our bullion business is down nearly 75 percent," he said.

Bigger, more reputable jewellers are also suffering.

"Small jewellers buy gold at 4 or 5 percent discount and then sell jewellery at 1 or 2 percent discount," said Aditya Pethe, a director at Waman Hari Pethe Jewellers in Mumbai.

"The business of big jewellers like us is getting affected.

But jewellers buying from the grey market say they have little choice.

"I wasn`t buying gold from grey market for months, but others were buying and doing business," said a Mumbai-based jeweller, who declined to be identified.

"In the last two months I`ve also started buying as I have to survive. I have to pay employees."

Forex reserve at record high of $365.82 billion

Country's forex exchange reserves surged by USD 73.2 million to touch a life-time high of USD 365.82 billion in the week to August 12, helped by increase in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had increased by USD 253.6 million to touch USD 365.75 billion.

Foreign currency assets (FCAs), a major component of the overall reserves increased by USD 81.6 million to USD 340.36 billion.

FCAs, expressed in dollar terms, include the effect of appreciation/depreciation of non-US currencies such as euro, pound and yen held in the reserves.

Gold reserves remain unchanged at USD 21.58 billion.

The country's special drawing rights with International Monetary Fund declined by USD 3.2 million to USD 1.49 billion, while the reserve position was down by USD 5.2 million to USD 2.39 billion, RBI said.

Sensex adds to gains for second day on sustained foreign fund inflows

The benchmark BSE Sensex continued its rising trend by gaining 89 points to 28,212.30 in early trade Friday on sustained foreign fund inflows.

The 30-share index rose 88.86 points or 0.31 percent to 28,212.30. The gauge had gained 117.07 points in the previous session.

Also, the NSE Nifty was quoting 23.35 points or 0.26 percent higher at 8,673.25.

All the sectoral indices, led by IT, teck and PSU were trading in the positive terrain with gains up to 0.77 percent.

Brokers said sentiment remained positive on the back of persistent capital inflows by foreign funds and widening of positions by retail investors.

However, a weak trend in other Asian markets forced investors on the domestic bourses to keep their activity restricted, they added.

Among other Asian markets, Japan's Nikkei index was down 0.07 percent while Hong Kong's Hang Seng index fell 0.27 percent in morning trade.

The US Dow Jones Industrial Average ended 0.13 percent up in yesterday's trade.

Gold import plunges 52.5% to $4.97 bn in April-July

Gold imports more than halved to USD 4.97 billion in the first four months of the current fiscal, which is expected to keep a lid on the current account deficit.

The sliding prices of the precious metal in both global and domestic markets are seen as a contributory factor for the 52.5 per cent decline.

Gold imports stood at USD 10.47 billion in April-July of 2015.

The in-bound shipments contracted for the sixth consecutive month in July by 63.65 per cent to USD 1.07 billion, according to Commerce Ministry data.

The contraction in imports helped narrow trade deficit to USD 7.76 billion last month as against USD 13 billion in July 2015.

India is one of the largest gold importers in the world and the imports mainly take care of demand of the jewellery industry.

India's CAD narrowed to 1.3 per cent of GDP in the third quarter of 2015-16 as against 1.5 per cent in the same period of the previous year, primarily due to a lower trade deficit.

With an aim to monetise gold lying idle in households and temples, the government netted 3.1 tonnes of the metal under the sovereign gold bond scheme since its launch in November.

As per the data, silver imports too went down by 80 per cent to USD 54.58 million in July as against USD 277.6 million in the same month last year.

However, in-bound shipments of pearls, precious and semi-precious stones grew 16.3 per cent in July.

Sensex slips 88 points on disappointing macro data

 Market benchmark Sensex declined 88 points to close at 28,064.61 Tuesday as investors cut down their bets after industrial output growth slowed down to 2.1 percent in June and inflation hits two-year high.

Lower international advices following a sharp rally in the yen and disappointing Japanese second-quarter GDP figures also hit investor sentiment.

An official data on Friday showed industrial output grew by 2.1 percent in June, although down from 4.2 percent a year ago, on account of poor show by manufacturing and heavy contraction in capital goods.

Besides, retail inflation shot up to nearly two-year high of 6.07 percent in July, well above RBI's comfortable level, on surge in prices of food items as demand for sugar, oil & fats and spices rose ahead of the festival season.

WPI inflation today hit a 23-month high of 3.55 percent in July.

"Markets have begun to refocus on macros, and the first of those have disappointed. Both the CPI and WPI have diminished chances of a rate cut in October," said Anand James Chief Market Strategist, Geojit BNP Paribas Financial Services.

The BSE Sensex resumed higher at 28,190.04 and hovered in a range of 28,199.10 to 27,942.65 before closing at 28,064.61, showing a fall of 87.79 points or 0.31 percent. The gauge had gained 377.52 in the previous two sessions.

The 50-issue Nifty fell 29.60 points or 0.34 percent to close at 8,642.55. Intra-day, it hovered between 8,682.35 and 8,600.45.

Shares of Unitech slumped 16.91 percent after the real estate firm expressed inability before the Supreme Court to refund money to the home buyers over its two delayed projects in Noida and Gurgaon.

Stock of Infosys slipped 1.16 percent to Rs 1,050.95 after the tech major announced it will ramp-down about 3,000 jobs, following Royal Bank of Scotland's decision to cancel a project to set up a separate bank in the UK.

Overseas, Asian stocks ended lower as the price of crude oil took a breather from a three-day rally. Japanese stocks fell by 1.62 percent as the yen strengthened against the dollar.

Other indices like China, Hong Kong, Singapore, South Korea and Taiwan moved down by 0.09 percent to 0.49 percent.

European also edged lower key indices in France, Germany and the UK down between 0.04 percent and 0.13 percent.

Turning to the domestic market, 17 scrips out of the 30-share Sensex ended lower.

Major losers were Sun Pharma 2.35 percent, Tata Motors 1.62 percent, TCS 1.50 percent, Wipro 1.38 percent, HDFC 1.36 percent, Axis Bank 1.27 percent, Bharti Airtel 1.24 percent, RIL 1.04 percent, HUL 0.97 percent and Maurti 0.89 percent.

However, Cipla rose 7.14 percent, Adani Ports 6.12 percent, SBI 1.34 percent, Tata Steel 1.17 percent, L&T 1.15 percent, ICICI Bank 1.12 percent and ONGC 0.86 percent.

The market breadth remained negative as 1,614 stocks closed in red, while 1,110 stocks finished in green and 169 ruled steady.

The total turnover fell to Rs 3,314.56 crore from Rs 3,996.38 crore on Friday.

Sensex regains 28K-level, zooms by over 320 points; Nifty above 8,600-mark

The BSE Sensex reclaimed the 28,000-level by gaining over 300 points and NSE Nifty breached the 8,600-mark Friday on continued buying by investors ahead of IIP and inflation data scheduled to be released later in the day

Review by 'scrutinisers' to bring transparency in MF

 Mutual fund houses on Thursday said markets regulator Sebi's directive of taking the service of 'scrutinisers', to review the rationale behind the voting decisions made by them, will bring in greater transparency in the sector.