Rupee Extends its Losses; Slips to Lowest Level Since Aug 2013

Rupee updates-CapitalHeightThe Indian rupee, extended its losses for the fifth consecutive day and traded 17 paise down at 68.73 against the US dollar, its lowest level since August 2013.

The rupee crashed to a nearly 39-month low of 68.84 amid sustained foreign fund outflows and the greenback’s surge in overseas markets.

The rupee breached the 68.80 mark as upbeat economic data strengthened the prospect for higher US interest rates, while the dollar’s bull run continued as US bond yields hovered near multi-year highs.

The rupee has fallen against the dollar since Donald Trump won the presidential election in the US on November 9, 2016. It has fallen from the 66.43 level and reached the 68.8325 mark today.

On the global front, Federal Reserve chair Janet Yellen has announced that Trump’s election has done nothing to change the federal reserve’s plans for a rate increase “relatively soon.” A rate hike in US will lead to flow of money from emerging markets leaving their currencies and assets vulnerable to the negative risks.

Chinese Yuan is also sinking, with values tumbling to a record low of 6.9378 against the US dollar at one point of time yesterday in the offshore markets. US dollar index will witness further gains, with values expected to hit 105 in the coming weeks. Euro seems to be the most vulnerable, influenced by the uncertainty over Italian constitutional referendum in the first week of December.

The Indian Rupee closed lower by 31 paise at 68.56/$. The local unit hit a high of 68.67/$ and a low of 68.83/$ today.

The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 68.47 while for the Euro it was 72.78. The RBI’s reference rate for the Yen stood at 61.71; reference rate for the Great Britain Pound (GBP) stood at 84.9665.

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Live Stock Market Updates – Nifty hovers at 8,400 mark

There is selling pressure seen in the Indian stock market.  Donald Trump elected as US President.

The Indian stock market crashed on opening on Wednesday morning, with the Sensex sinking over 1,600 points while the Nifty slumped to near 8,000 levels.

The Nifty cracked over 400 points but bounced back from its crucial support level of 8,000. The fall in the index was weighed down by losses in realty, power, oil & gas, metal, consumer durable, and banking stocks.

At 12:01 PM, the S&P BSE Sensex is trading at 26,791 down 800 points, while NSE Nifty is trading at 8,243 down 303 points.

The BSE Mid-cap Index is trading down 4.72 % at 12,350, whereas BSE Small-cap Index is trading down 5.74% at 12,303.

Bharti Infratel, HDFC Bank, Power Grid, Lupin are losing sheen on NSE.

All the BSE sectoral indices were trading in the negative territory. Realty, metal, auto and IT are showing weakness on NSE.

The INDIA VIX is up 19.60% at 20.0575. Out of 1,870 stocks traded on the NSE, 1,495 declined, 78 advanced and 297 remained unchanged today.

A total of nine stocks registered a fresh 52-week high in trade today, while 170 stocks touched a new 52-week low on the NSE.

The rupee opened lower by 19 paise at 66.80/$ as against the previous close of 66.61/$.

On the economy front, Prime Minister Narendra Modi to abolish the Rs 500 and Rs 1,000 notes on Tuesday. Nearly 40 percent of the economy is driven by small- and medium-sized enterprises that largely run on cash transactions.

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How Will The U.S. Election Impact Markets?

The seemingly never-ending spectacle that is the US presidential election campaign is entering its final act. By the end of the night on November 8, either Hillary Clinton or Donald Trump will become the new president-elect of the world’s largest economy. While it seems like the media has dissected every aspect of the upcoming election, from email servers to hand sizes, comparatively little ink has been spilled about how election could affect global asset markets.

This special report seeks fill in those gaps. In the following sections, we provide an overview of the US election process and timeline; a look at a couple of the candidates’ most market-moving economic policies; and an examination of how markets have historically reacted under different political regimes, including actionable takeaways to use in your own trading.

What Do Polls Say?

Opinion polls have been volatile throughout the national campaigns, though Hillary Clinton has generally maintained a lead over her Republican rival. That said, last week’s news that the FBI has reopened its investigation into Clinton’s controversial email server has brought Donald Trump back within striking distance. According to poll aggregator Real Clear Politics, Clinton is currently polling at 47.2% nationally vs. 45.5% for Trump and the situation remains highly fluid:

We’re traders, not political pundits, so we won’t try to handicap the likelihood of each outcome. Overseas bookmakers are giving Hillary Clinton a 70/30 chance of winning the election. The experts at the election forecasting site FiveThirtyEight.com agree that these odds are accurate. Based on the website’s “Polls-only” model, Editor in Chief Nate Silver and company currently give Clinton about a 70% chance of taking the oath of office, though that forecast will of course change as new polls come in.

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5 Reasons Stocks will Rally after the U.S. Presidential Election

After that, the stars are aligning for a nice market rally in seasonally favorable November, for five reasons. Here they are:

  1. The economy is in decent shape

On Oct. 28 the Commerce Department reported gross domestic product expanded 2.9% in the third quarter. That depended heavily on soybean exports, and may well be revised down in the future, but it was a big improvement over its 1%-plus range in the first half.

If recent trends continue, Nov. 4’s jobs report (for October) should be pretty good. Job growth averaged 192,000 in July through September, having picked up the pace from earlier in the year, although it’s well below 2015’s average monthly increase of 229,000. And though neither average weekly earnings nor workforce participation have moved much, this suggests an economy that’s still growing, albeit not as fast as we’d like.

  1. The Fed is on hold until at least December

Frankly, I’m tired of writing about whether the Federal Reserve will or won’t raise rates at any given meeting, because it’s pretty useless to anyone except hyperactive traders. On Nov. 2, the rate-setting Federal Open Market Committee (FOMC) postponed any possible rate hike in the federal funds rate until its December meeting, when traders give a quarter-point increase a 74% probability.

And even if that happens, the fed funds rate would still be only 0.5%-0.75%. Next year, the FOMC will become more dovish, making further rate increases more difficult. The only surprise for Wall Street would be if the FOMC does not raise rates in December, and that would be bullish for stocks.

  1. Earnings are looking up

According to Howard Silverblatt of S&P Dow Jones Indices, 73% of companies that had reported quarterly results by Monday had beaten their earnings estimates and 55% had exceeded analysts’ revenue projections. John Butters, senior earnings analyst for Fact Set Research Systems, wrote Oct. 28 that S&P 500 SPX, -0.17% earnings are on track to rise 1.6% in the third quarter, and the first time they’ve shown positive growth since the first quarter of 2015. So the earnings recession brought on by the collapse of oil prices is probably over, and that may not be in the market.

  1. Sentiment is too bearish

My MarketWatch colleague Mark Hulbert pointed out Oct. 31 that “a good portion of the market-timing community recently turned cautious, if not outright bearish.” A proprietary index he tracks of short-term market timers revealed a recommended stock exposure of only 13.9%. Meanwhile, equity mutual funds experienced their biggest weekly outflows in five years ($16.3 billion) as investors moved into bonds and passively managed funds.The CBOE Volatility Index VIX, +1.95%   (VIX) has shot up by 50% over the past month. Contrarians, of course, would find these trends bullish.

  1. The election will soon be over!

FBI Director James Comey’s terse letter to several Republican congressional chairmen Oct. 28 revealing “the existence of emails that appear to be pertinent to the investigation” of Democratic candidate Hillary Clinton’s use of a private email server while at the State Department was the October surprise everyone was waiting for.

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US Presidential Election: How Will Stocks React?

The United States will vote for a new president next Tuesday. Should investors care? They should certainly be on alert if Donald Trump somehow pulls off a shock victory, according to high-profile University of Michigan economist Justin Wolfers.

He is also co-author of a recent study which warned that a victory for the Republican candidate could result in US, British and Asian stock markets plummeting by 10 to 15 per cent.

His analysis was based on the reaction of financial markets during the first presidential debate on September 26th. Trump’s poor performance resulted in Hillary Clinton’s odds of election victory increasing from 63 to 69 per cent, much to the delight of financial markets.

US stocks jumped in overnight trading, with similar moves seen in UK and Asian indices. Oil prices rose, gold fell and there was a sharp fall in the Vix, the so-called fear index that tracks market volatility. The Mexican peso, which has been moving in the opposite direction to Trump’s poll numbers throughout 2016, jumped, as did currencies in Canada, South Korea and Australia currencies. These are all countries with which the US has free trade agreements, noted Wolfers in a series of tweets explaining his findings, and are “at risk” countries that could suffer from Trump’s protectionist policies.

Besides an equity market sell-off, his paper estimates that a Trump victory could catalyse a $4 fall in oil prices, a 25 per cent decline in the Mexican peso and “significantly increase expected future stock market volatility”. This “Trump discount” is comparable to those that accompanied the Brexit vote or the 2003 invasion of Iraq, the paper concludes.

Other firms have issued similar warnings. Forecasting firm Macroeconomic Advisers, which has also been tracking the correlation between Trump’s election odds and market movements, cautions that a Trump victory could see stocks fall by 8 per cent. Buiter estimates a Trump win would result in global policy uncertainty and trigger a one-standard deviation tightening in US financial conditions, thereby affecting global consumption and investment.

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US poll spooks market but S&P retains stable outlook on India

Sensex market Indian investors are spooked as global markets fall after multiple polls project Donald Trump’s ahead of the US Presidential elections. The Sensex is down 278.50 points or 1 percent at 27598.11, and the Nifty is down 89.95 points or 1 percent at 8536.30. About 788 shares have advanced, 1941 shares declined, and 94 shares are unchanged.

However, there are good news for India as S&P has affirmed BBB-/A-3 rating on India with stable outlook. The rating agency does not expect to change rating on India this or next year. It reiterated that downward pressure could re-emerge if Monetary Policy Committee is not effective in meeting its target.

It expects India to fund current account deficit mostly with inflows without adding to debt, and banking regulator Reserve Bank of India to achieve inflation target of 5 percent by March 2017.

Meanwhlie, ONGC, Tata Motors, SBI, BHEL and Sun Pharma are losers in the Sensex. M&M, HUL and NTPC are gainers.

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