RBI allows non-residents to hedge currency risk with banks

The new guideline aims at mitigating currency risk attached with the rupee borrowings. RBI had allowed overseas borrowings in the local currency in September

Mumbai: The Reserve Bank of India (RBI) today allowed non- residents to hedge currency risk for external commercial borrowings (ECBs) denominated in rupees with Indian banks, reports PTI.

The new guideline aims at mitigating currency risk attached with the rupee borrowings. RBI had allowed overseas borrowings in the local currency in September.

RBI said microfinance NGOs have been permitted to avail of ECBs designated in rupee, under the automatic route, from overseas organisations and individuals as per the guidelines.

It has been decided to allow non-residents to hedge their currency risk in respect of ECBs denominated in rupees with banks in India, RBI said in a notification.

Non-residents invest in products like forward foreign exchange contracts, foreign currency-INR options and foreign currency-INR swaps with rupee as the currency.

RBI said the amount and tenor of the hedge should not exceed that of the underlying transaction. Besides, it should be in consonance with the extant regulations regarding tenor of payment or realisation of the proceeds.


23 stocks on all-time high in a bear market

The Sensex is down 23% this year. Yet 23 companies hit their all-time high in December

These stocks would have brought a cheer to their shareholders. Going against the market decline, 23 stocks hit their all time high in December. The list contained a few big names like Hindustan Unilever, Sun Pharmaceuticals and UltraTech Cements. All the three have shown good year-on-year (y-o-y) sales and operating profit growth in the last three months. These three are a part of the 1,295 stocks that Moneylife tracks along with Apollo Hospitals Enterprise, Cochin Minerals & Rutile and Pradip Overseas, which are also present on the list.

Cochin Minerals & Rutile, manufacturer of synthetic rutile and ferric chloride, has shown good y-o-y growth in sales as well as operating profit in the previous two quarters and hit its all-time high of Rs147 up 122% from its price of Rs66 at the start of the year. Pradip Overseas, a textile manufacturer with niche focus on home linen products, somehow managed to draw investor interest despite poor financials and touched a high of Rs113 up 39% from its price of Rs82 at the start of the year. This boost in price could be majorly due the news that the company is planning to raise about $30-$40 million by the end of this financial year for infrastructure capex as well as for retail branding.

There were two IPOs on the list, as well—Aanjaneya Lifecare and Flexituff International. These stocks were up 69% and 81%, respectively, from their close on listing day to their all time high.

A few other companies on the list included Maharaja Shree Umaid Mills, a composite textile company that makes cotton yarn, cotton fabrics and synthetic yarn. The company had a price of Rs253 at the start of the year and touched its all-time high of Rs609 at the beginning of this month.

Surprisingly, the list had seven micro-cap stocks on it, as well. These stocks are usually expected to get trashed when the market falls, but somehow these companies stood out and their prices have shown considerable growth for the year. These companies were Ahlcon Parenterals (India), Cochin Minerals & Rutile, Golden Goenka Fincorp, Luminaire Technologies, Mudit Finlease, Pro Fin Capital Services and Tricom Fruit Products. Some of these stocks have been rigged up but with the market regulator and stock exchanges looking the other way, those close to the promoters are having a good time.



Narendra Doshi

5 years ago

Good timely write-up.
By the way, how many of these were spotted by MDT and reported?

Share prices headed for a bigger fall? Thursday Closing Report

If the Nifty does not close above today’s high, it may be headed for our longstanding medium-term target of 4,400 in the New Year

The market ended near the day’s lows on worries about the slowdown in growth on the lack of political consensus to push much-needed economic reforms. Since October 2011, the market has gone through three phases of short rallies with the Nifty making lower highs and two phases of downtrend trend making a lower bottom, this being the third one. The recent fall which began on 8 December 2011where market fell for eight trading days taking the indices to a more than two year low. After this, the index hardly managed to make three days of gains and again slipped into the negative zone. We had mentioned in our closing report of 21 November and 16 December that the downward trend may lead the market to reach the level of 4,400. Read here: Sensex, Nifty fall over 2.5% on global cues: Monday Closing Report  and A bigger decline in the offing? Friday Closing Report. We may see the Nifty finding its first support at 4,500 then at 4,470 and 4,355. Today being the expiry of the current month futures and options contract, the NSE witnessed a volume of 68.60 crore shares.

The market witnessed a gap-down opening on weak global cues. Markets in the US closed near their session lows following a slide in the euro to an 11-month low against the dollar on renewed concerns about the debt crisis. Asian markets opened in the negative on lower closing of the US and European markets overnight. Back home, the Nifty opened 25 points down at 4,681 and the Sensex started the day’s trade at 15,659, a cut of 69 points.

Trading in a narrow range albeit in the negative, the indices touched their day’s high in the late morning session. At the highs, the Nifty rose to 4,702 and the Sensex to 15,725. The political standoff at the Centre over passing of the Lokpal Bill kept the indices sideways during trade today.

Investors were jittery on concerns that corporate earnings for the third quarter would be lower-than-expected. The sell-off by institutional investors expanded in the last hour pushing down the indices further southwards. The market fell to its intraday low towards the end of trade with the Nifty going down to 4,639 and the Sensex went back to 15,515.

The market closed a tad above those levels. At the finish, the Nifty fell 60 points to 4,646 and the Sensex declined 184 points to settle at 15,544.

The advance-decline ratio on the NSE was negative at 598:1047.

In the broader market space, the BSE Mid-cap index lost 0.35% and the BSE Small-cap index declined 0.74%.

BSE Metal (up 0.23%) and BSE Healthcare (up 0.19%) ended higher while the other 11 sectoral gauges settled in the red. The top losers were BSE Oil & Gas (down 2.62%); BSE Capital Goods (down 2.39%); BSE Realty (down 1.66%); Power (down 1.43%) and BSE Consumer Durables (down 1.31%).

The Sensex gainers were led by Jindal Steel (up 1.70%); State Bank of India (up 1.08%); Sterlite Industries (up 0.72%); Hindalco Industries (up 0.60%) and Wipro (up 0.20%). Maruti Suzuki (down 3.96%), BHEL (down 3.59%); Reliance Industries (down 3.47%); Tata Power (down 3.38%) and DLF (down 3.01%) were the top losers on the index.

The top-five stocks on the Nifty were Jindal Steel (up 2.20%); Grasim (up 1.65%); Punjab National Bank (up 1.10%); SAIL (up 0.94%) and State Bank of India (up 0.86%). The laggards on the benchmark were Reliance Communications (down 5.35%); Reliance Infrastructure (down 4.55%); Tata Power (down 4.35%); BHEL (down 4.09%) and BPCL (down 4.02%).

Markets in Asia closed mixed as investors were awaiting the outcome of an Italian bond auction, which is to take place later today. Meanwhile, South Korea’s factory output in November came in below expectations on falling demand from export markets.

The Shanghai Composite gained 0.16%; the Jakarta Composite surged 1.05%; the KLSE Composite advanced 0.31%; the Straits Times rose 0.24%; the Seoul Composite added 0.03% and the Taiwan Weighted closed 0.26% higher. On the other hand, the Hang Seng declined 0.65% and the Nikkei 225 fell by 0.29%. At the time of writing, the key European indices were trading with minor gains while the US stock futures were mixed.

Back home, foreign institutional investors were net buyers of stocks amounting to Rs81.44 crore on Wednesday. On the other hand, domestic institutional investors were net sellers of equities totalling Rs96.49 crore.

Dr Reddy’s Laboratories today said it has launched ‘Supamove’ cream used for treating pain and inflammation in India. The company has also launched another product, Venusia Soft lotion in 75 ml pack, used for providing relief from dry, itchy skin. Both products are in-licensed from US-based Cymbiotics Inc. The stock added 0.07% to close at Rs1,567.95 on the NSE.

Private equity firm Jacob Dallas may acquire a 5% stake in Religare Finvest, a non-banking financial services arm of Religare Enterprises, for about Rs200 crore. The deal would value the company, an NBFC focussed on the MSME segment, at close to Rs4,000 crore and would be its second private equity investment in a quick succession. Religare Enterprises shed 0.17% to settle at Rs400.25 on the NSE.

Realty firm Godrej Properties today said the company has raised Rs45 crore by selling 49% stake in its arm to private equity firm Sun Apollo. Sun Apollo has invested Rs45 crore out of which Rs18.3 crore has been paid to Godrej Properties for sale of stake and Rs26.7 crore has been invested in Godrej Premium Builders. Godrej Properties was down 0.27% at Rs617 on the NSE.


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