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BSE (Bombay Stock Exchange)
USD INR= 1 Sep 16 <b>46.540 </b>

BSE Sensex 13,285.52 -245.75 (-1.82%)
Nifty 3,995.60 -77.30 (-1.90%)
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Why the rupee is falling against the dollar</b>
September 23, 2008
The main reasons behind the fall of the rupee are an increased demand for dollars <b>due to a spurt in crude oil prices and the flight of foreign funds from the Indian market. </b>Demand for rupees, simultaneously, has dipped because capital inflows are down.

The American sub-prime crisis that shook the global financial markets has seen unprecedented bailouts and infusion of dollars into the US economy. This infusion has been at a cost of many an emerging market, from where funds have been pulled out to plough back into America. India has been one of the worst hit countries on this count, as foreign funds took flight, thereby making dollars scarce. The sudden and colossal demand for the US greenback has seen it strengthen, while the rupee's exchange rate has depreciated dramatically during the same period.
India's stock market regulator, the Securities and Exchange Board of India, has said <b>that foreign investors sold more Indian shares than they bought. </b>
<b>Global funds are said to have sold Indian shares to the tune of over $9 billion more than they have bought this year</b>. As demand for dollars from importers increased and the US Treasury poured in almost $700 billion into the US economy to bail out drowning financial giants, the Indian market saw an outflow of a huge amount of dollars leading to a spurt in the dollar price against the rupee. <!--QuoteEnd--><!--QuoteEEnd-->

USD INR= 45.630
<b>India Central Bank May Cap Rupee Drop, Former Panel Member Says</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Sept. 25 (Bloomberg) -- India may cap rupee losses at between 46 and 47 a dollar as further declines will strain finances of state-owned refiners reeling from a rebound in oil prices, according to a former member of a central bank panel.

Overseas investors have sold $8.8 billion more Indian shares than they bought this year, causing a 14.2 percent slide in the rupee that was the second-worst performance among the 10 most-active Asian currencies excluding the yen.

The current-account deficit, the shortfall in trade and investment flows, widened to a record $17.4 billion in the financial year ended March 31, from $9.8 billion the previous year, central bank data show.

Oil Subsidies

<b>Oil subsidies have climbed to $42.5 billion </b>even as India raised fuel prices twice this year, according to the central bank. Indian Oil Corp., the country's biggest refiner, reported a 72 percent drop in profit in the quarter ended June 30, while smaller rivals Bharat Petroleum Corp. and Hindustan Petroleum Corp. reported losses. Crude oil in New York has risen almost 19 percent from a seven-month low touched on Sept. 16.

``Oil companies are finding it extremely difficult to finance even their working capital,'' Rajwade said. Central bank intervention policy will ``keep in mind their finances.''

The central bank may refrain from raising rupee interest rates because the government would pay a political price with elections due in seven months, Rajwade said.

<b>Social disorder may discourage overseas funds from putting money into India, he said.</b> A chief executive of a local unit of an Italian company was bludgeoned to death this week near New Delhi by workers who were fired by the factory.

Rupee ``volatility is rising,'' Rajwade said. ``I am advising my clients to pay a fee and buy options'' to hedge their risks.
Indian Rupee's `Unprecedented' Decline Not Over, Treasurers Say <!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Dwindling capital inflows, elevated oil prices and slowing economic growth will undermine the rupee, said Yeshwant M. Deosthalee, chief financial officer at Mumbai-based Larsen & Toubro, India's biggest engineering company. A weaker currency may also exacerbate an inflation rate near a 16-year high by increasing import costs, said Ravi Sud, chief financial officer at Hero Honda, the nation's largest motorcycle maker.

``The drop in the rupee is unprecedented and never have I seen such a move in my 28-year career, barring the devaluation in 1991,'' said N.S. Paramasivam, who trades an average $200 million a day as head of treasury in Mumbai at Essar, which has businesses in shipping, steel and oil. ``The downside risk to the rupee is mostly emanating from lack of dollar supply.''

<b>The rupee has dropped 16 percent this year, heading for its worst annual performance since 1991, when India devalued the currency as a balance-of-payments crisis forced it to pawn gold from its reserves</b>. Exporters and importers alike are struggling to cope with as the exchange rate has swung between a decade- high and a 26-month low within a year.

<b>Price Swings </b>
The rupee touched 47.115 a dollar yesterday, the lowest level since June 3, 2003, after reaching 39.185 on Nov. 7 last year, its strongest since February 1998. Essar's Paramasivam predicts the currency, which was at 46.955 late yesterday in Mumbai, will trade between 45 and 47.50 over the next six months.

<b>India's current-account deficit may widen by $12 billion in the financial year ending March 31, 2009, after reaching a record $17.7 billion the previous year, he said. Imports exceeded exports by $10.8 billion in July, the most ever</b>.

India's foreign-currency reserves were $282.8 billion as of Sept. 19, down from a record $316.2 billion four months earlier, central bank figures show. The drop indicates policy makers sold dollars to bolster the rupee.

<b>``India still is a domestic-demand driven economy,'' </b>he said. ``That will soothe sentiment sooner or later.''
USD = Sep 30 <b>47.435 </b>
USD = Oct 6 <b>48.025</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Sensex bleeds 725 points </b>
Rakesh Bihari Jha | New Delhi
In the wake of exodus of foreign funds and subsequent crashing of the Indian stock market, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) are taking corrective measures to provide liquidity in the financial system.

While the RBI slashed the cash reserve ratio<b> (CRR) by 50 basis points to 8.5 per cent for providing the Indian banking system with Rs 20,000 crore</b>, SEBI lifted curbs on the issuance of the Participatory Notes by Foreign Institutional Investors (FIIs) to revive the markets.

<b>It was Monday mayhem on Dalal Street as Sensex crashed down by 725 points even as $2 trillion global financial bailout package failed to instill confidence in investors all over the world. </b>India was no exception.

<b>Sensex, which had lost 529.35 points in the previous session</b>, plunged by <b>another 724.62 to close at a two-year low of 11,801.70, while Nifty dropped by 215.95 points, at 3,602.35 </b>after the FIIs indulged in all-round selling in heavyweight stocks of consumer durables, metals, capital goods and realty sectors. They invested in shares worth Rs 2,051.23 crore and shed stocks valued at Rs 3,220.56 crore, resulting in a net sale of Rs 1,169.33 crore as per provisional data available on the BSE.
<b>Sensex below 11K, tumbles over 800 points</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The Sensex is now down 857 poins at 10,839 on the back of relentless selling in the market.

The NSE Nifty has shed 243 points at 3,364.
This is global.
Expect lot of BPO will go under. Call centers will close.
Expect atleast 30% reduction in IT sector, including closing offshore operation, back office and layoff.
Expect IT layoff and reduction in salary.
10:14 AM - A lower Infosys guidance would not augur well for the company as well for the sector, says Nilesh Shah of Envision Capital, on CNBC-TV18. <b>He sees the IT sector getting de-rated now</b>. BSE IT index is down 12.5% currently.

10:07 AM -<b> Infosys has lowered its revenue growth guidance from 19-21% to 13-15%, reports </b>CNBC-TV18. The management says Q3 revenues are seen at around $1.175 billion. The stock is currently trading at Rs 1,055, down over 15% on the BSE.

10:02 AM - The market has opened with a huge gap down on Friday. Sensex is at 10,529, down 799 points from the previous close. Nifty is at 3243, down 270 points.
BSE -1070.63 <b>8701.07 </b>-10.96%
NSE -359.15 <b>2,584.00 </b>-13.90%

<b>US Dollar 49.75 </b>

Meanwhile, Finance Minister P Chidambaram had attributed depreciation of the rupee to redemption pressures faced by some FIIs.
Rupee has depreciated by about 20 per cent since the beginning of this fiscal.
<b>92.6 pc of bank deposits fully protected: Govt</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Government on Friday said that 92.6 per cent bank deposits are fully protected under the Deposit and Insurance and Credit Guarantee scheme.

"As at the end of March 2008, fully protected deposits accounts constituted 92.6 per cent of total number of deposit accounts," Minister of State for Finance Pawan Kumar Bansal said in a written reply in the Lok Sabha.<!--QuoteEnd--><!--QuoteEEnd-->
At this time, the indian stock market is a screaming buy, if bought correctly

Try EPI,
for more details visit http://www.wisdomtree.com

Div Yield = 2.7%
P-E = 5.46
P-Book = 1.35
P-Sales = 0.65
P-Cash flow = 4.32

<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->At this time, the indian stock market is a screaming buy, if bought correctly<!--QuoteEnd--><!--QuoteEEnd-->
Wait till US election is over, If Obama win, as democrats are planning a bill to nationalize 401K. In that case, US market will have no money from 401K to invest in International market. Plus G20 meet in Nov is very important. New regulation may be placed.
Even those in India, can copy the portfolio from EPI and invest using individual stocks
9:48 AM - RBI cuts rates across the board to ease liquidity pressures, SLR cut by 100 bps and it stands reduced by 1% to 24% from 25%, reports NDTV Profit. CRR cut by 100 bps and Repo rate cut by 50 bps to 7.5%.

US Dollar 48.94
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->I happened to run in to Nanubhai on Dalal Street . He was eating
Khaman Dhokla in a farsan shop.

Kem cho, Nanubhai?"
"Saru che."

He was looking glum but gestured me to join him.
As I bit into the tasty dhokla with tangy chutney on the Friday afternoon, which was fast turning into a 'Manic Friday' as per Dalal Street lingo, he was staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.

Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder' s query.

"What went wrong with Lehman Brothers?" I asked.
"Lots of things. If the founder brothers, Henry, Emanuel and Mayer were alive this wouldn't have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India ."

"Are you trying to tell me an Indian would have handled this differently? "
"Bilkul. If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders. "

"But when there is massive failure there would be no option but to file for bankruptcy?"
"Fail-wail chance hi nahin! Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn't open the survival kit to stay afloat."

As we were sipping double kadak chai, I asked:

"Did anybody anticipate this global meltdown?"
"Anticipate? Mazak chodo! I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanford etc. Kisiko kuch patha nahin tha! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong "fundamentals" of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices."

"What will happen if it goes all on like this?"
"Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna. Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre."

"What will happen to the Indian market?"
"It's already having the Lehman Brothers' effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don't know what he will do next. He is again from Harvard!"

"What is the lesson to be learnt from the Lehman Brothers' episode?" I asked as we were leaving.

Nanubhai took a spoonful of saunf and said:

"You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into 'Left' and 'Right' with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the 'Left' and nothing was left in the 'Right'," concluded Nanubhai.<!--QuoteEnd--><!--QuoteEEnd-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->"<b>What will happen to the Indian market?"
"It's already having the Lehman Brothers' effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don't know what he will do next. He is again from Harvard!"</b><!--QuoteEnd--><!--QuoteEEnd--> <!--emo&Big Grin--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> <!--emo&Big Grin--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo-->
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Sensex sees the third-biggest fall of the year</b>
PTI | Mumbai
The Bombay Stock Exchange benchmark Sensex on Monday suffered the third-biggest fall of the year and ended below the 15,000 level by losing nearly 438 points on weak Asian and European trends, as investors booked profits on an 88 per cent rally since early March.

The Sensex, after completing 13 successive weeks of gains, suffered a loss of 437.63 points to 14,665.92 as metal, banking and realty stocks suffered hefty losses. The fall was the third-highest after those of January 7 and March 30.

<b>In a similar fashion, the 50-share National Stock Exchange index Nifty dropped by 157.00 points to 4,429.90, breaking a psychological 4,600 level.</b>

Only information technology stocks were in positive territory following a firming dollar, raising hopes of better revenue. <b>Over 50 per cent of the country's software export revenue comes from the US markets.</b>

Marketmen said the steep rise of 88 per cent in the market was overdone and attracted profit-selling by funds and retail investors.

They said the selling was more confined to sectors which had recorded handsome gains in recent times.

The major puller to the market were heavy-weight stocks like Sterlite Industries, Reliance Industries, Tata Steel, Reliance Communications, Reliance Infra, Jaiprakash Associates, ICICI Bank and State Bank of India.The realty sector index suffered the most, losing 10.54 per cent to 3,604.92, as Jaiprakash Associates and DLF Ltd dropped.

Jaiprakash declined 10.40 per cent, DLF 10.24 per cent, Unitech Ltd 13.80 per cent, Mahindra Life 13.61, Indiabull Realestate 10.06 per cent and HDIL 11.67 per cent.

<b>The metal index was the second-worst performer, losing 6.51 per cent to 10,933.58.</b>

<b>The banking index fell 4.42 per cent to 7,841.76, consumer durables 4.41 per cent to 2,897.33, PSUs 4.32 per cent to 8,316.78, power 3.46 per cent to 2,904.46, capital goods 3.18 per cent to 12,511.43, auto 2.66 per cent to 4,802.85, FMCG 2.56 per cent to 2,162.85 and oil and gas 2.52 per cent to 10,063.55.</b>

However, information technology rose 1.57 per cent to 3,203.73 on expectations that the firming dollar would boost earnings. Over 50 per cent software export revenue comes from the US markets.
<!--emo&Smile--><img src='style_emoticons/<#EMO_DIR#>/smile.gif' border='0' style='vertical-align:middle' alt='smile.gif' /><!--endemo--> Overall, the Sensex recovered sharply last week by 9.19 per cent — the highest in Asia — on better monsoon prospects, better-than-expected results from Goldman Sachs and Intel and several statements by key ministers, including the finance minister, on the fiscal deficit and economic reforms. The entry of Foreign Institutional Investors reflect their confidence in India's economic recovery.

Besides the monetary policy review on July 28, market players would be looking forward to announcement of the government’s disinvestment plans, key corporate results and global cues.

According to market analysts, sensex is likely to climb 14 per cent to cross the 16,000-mark in the next 12 months, riding on improving macro outlook and liquidity conditions.

The Indian Stock Market has opened itself up to international investors and with the relative ease that has come into dealing in the stock-exchange today, with the advent of the electronic age, more and more investors are pouring their savings into the Indian stock market, discouraged by the low returns from bank deposits.

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