New Delhi, December 18
The Indian rupee, that has weakened almost 16 percent against the US dollar since the beginning of the year, is likely to remain volatile in the coming months due to uncertain domestic and global economic outlook, say analysts.

The partially convertible rupee got battered in the last one month, hitting a record low of 54.30 against a dollar Dec 15, almost 24 per cent down from the year's high of 43.85 recorded July 27. It has been the worst performing among Asian currencies.

"In the short term, say, the next five to eight weeks, the rupee will remain volatile with negative bias," said Sanjeev Krishan, executive director at PricewaterhouseCoopers (PwC).

He said the rupee was likely to decline further and hit a new low if economic data remained weak and major policy concerns affecting industry and economic growth were not addressed.

"Currently, we don't see any pull back trigger. If there is improvement in economic numbers and some good news from the policy-making front, then the things can reverse," Krishan said.

The rupee depreciated sharply in the last two weeks mainly because of increased demand for the greenback from importers and investors, and outflow of capital from Indian equities market amid concerns about slowing growth, high inflation, widening deficit and inability of the government to push forward key reforms.

Overseas investors are the net sellers in the Indian equities market this year. After pumping in almost $29 billion in 2010, foreign investors have cut holdings of Indian shares by $353 million so far in 2011.

Top economic policy makers, including Finance Minister Pranab Mukherjee, have expressed concern over the rupee slide. "No finance minister will find it comfortable when rupee is declining," Mukherjee told lawmakers last week.

However, Nobel prize winning economist Amartya Sen does not share the pessimism. He said the depreciation in the value of the currency also benefited a section of the economy. So it should not be considered a disaster. He pointed out that some countries like China were deliberately keeping their currencies undervalued to boost exports.— IANS

New Delhi, December 18
Unfazed by the setback to plans for foreign direct investment in retail, the government is moving ahead with a proposed hike in the foreign investment cap in different broadcasting services like direct-to-home and cable TV networks to a uniform 74%.

The finance ministry has given its approval to the draft cabinet note circulated by the industry ministry for liberalizing the sector, sources said.

Among different segments, 74% FDI would be allowed in the mobile TV, an area of future growth.

The department of industrial policy & promotion (DIPP) in the industry ministry has suggested that FDI limits in the broadcast carriage services providers, including Head-end in the Sky (HITS) must be uniform. HITS is a satellite multiplex service that provides cable channels for cable television operations.

At present 49% FDI is allowed in cable TV and DTH, while it is 74% in HITS. However, for the TV news channels, FM radio and content provides, the FDI limit will stay at 26%, the sources said.

"We support DIPP's proposal for allowing 74% foreign direct investment in broadcast carriage services and 26% in content services," a senior finance ministry official said. He added uniformity had been proposed keeping in view convergence of technologies in the broadcasting and telecom sectors.

In June last year, the Telecom Regulatory Authority of India had suggested to raise the FDI for broadcast carriage services like DTH to 74%. As per an estimate, there are about 106 million households with cable and satellite TVs in India, of which 26 million use DTH and 80 million get feed from the cable network.

The Congress party-led coalition government suffered a setback when it had to put on hold its decision to allow 51% FDI in multibrand retail because of political opposition. — Agencies

Mumbai, December 18
Weak stock markets pulled down the combined market capitalization of the country's nine most-valued firms by Rs 61,485 crore last week, with SBI taking the biggest hit. Besides, Wipro made it to the top-10 league, pushing out HDFC Bank during the trading week ended December 16.

Software major Infosys was the only stock that saw rise in its m-cap among the top 10 during the period. It climbed to Rs 1,56,022 crore from Rs 1,55,387 crore as on December 9. Meanwhile, SBI saw its market value plummet by Rs 11,652 crore to Rs 1,06,708 crore as of Friday's close on the BSE.

Reliance Industries saw an erosion of Rs 10,626 crore from its market valuation, which was fell to Rs 2,36,742 crore, while TCS' value dropped to Rs 223,808 crore, from Rs 229,327 crore as on December 9. The market-worth of ONGC declined Rs 9,925 crore to Rs 2,13,972 crore. — PTI

It was a bad week for the bourses. At the end of the five trading days the Bombay Stock Exchange Sensex plummeted 4.45 per cent or 722.11 points to close at a two-year low of 15,491.35 points. In the process it also registered a new low of the year at 15,425.20 points.

The NSE Nifty fell 4.42% or 215.10 points to close at 4,651.60 with the new low being 4,628.20. With this fall the entire gains and more have been erased in two weeks.

The broader indices like the BSE 100, BSE 200 and BSE 500 lost 4.56%, 4.69% and 4.81%, respectively, while the BSE MidCap and BSE SmallCap posted bigger losses at 6.11% and 6.03%, respectively. The big sectoral losers were the BSE Realty (down 8.22%), BSE Bankex (down 7.25%) and BSE Metal (down 7.08%). The ones that held themselves were the BSE FMCG which lost a mere 0.70% and the BSE IT with losses of just 0.37%.

In individual stocks Hind Unilever and Infosys closed with gains while the big losers were the steel players JSW Steel (down 13.23%), Sterlite (down 11.83%), SAIL (down 10.28%) and Tata Steel (down 8.36%).

Among banking stocks Axis Bank fell 9.18%, SBI (down 9.87%) and ICICI Bank (down 7.65%). Virtually all sectors registered losses barring software and FMCG counters.

There was enough of news flow for the week and likely events will keep the markets on tenterhook going forward. Gold and silver has also reacted during the week and lost ground. The RBI intervention in the foreign exchange market helped it to strengthen the rupee compared to its Thursday close and the Indian currency closed at Rs 52.68 against the US dollar for the week against the previous week's close of Rs 52.05.

Foreign institutional investors were sellers for the week with net sales of equity of Rs 1,673 crore while domestic institutions bought equity worth Rs 1,481 crore. There is a lot of concern on the equity front and with the market losing in excess of 24% for the year so far and the rupee depreciating another 17%, India is the worst performing market globally.

The week ahead continues to be. With just two weeks to go for calendar year 2011 to end, fund managers are under pressure to improve their performance. The markets are likely to be under further pressure.

The Sensex has support at 15,254, then at 15,157, then at 14,990, then at 14,855 and finally at 14,657 points. It has resistance at 15,898, then at 16,092, then at 16,360 and finally at 16,542 points. The Nifty has support at 4,580, then at 4,549, then at 4,504, then at 4,454 and finally at 4,389 points. It has resistance at 4,770, then at 4,831, then at 4,910 and finally at 4,961 points.

There is every possibility that after two consecutive big weekly losses, the market may consolidate and actually post gains. If it does it would not indicate a turnaround but a mere pullback. There could also be some NAV support as the year ends. One should use all such opportunities to exit the market.

The author is founder of KRIS, an investment advisory firm. The views expressed are his own