Rupee plunges 33 paise V/s US Dollar; RBI Policy meet outcome dictates the markets this week.

The domestic currency dropped sharply on the very first trading day of the third quarter of the financial year 2017-2018. The weaker note in rupee might also be on account of the fall in the FOREX reserves.

The Indian rupee again plunged into negative terrain today after it in some extent recovered from its 6 ½  month lows on Friday last week and it  dived upto 33 paise to the day’s low of 65.61/USD on Tuesday. The sharp pitch in the domestic currency came in after the US dollar gained more vigor against a basket of currencies overseas.

The US dollar hit a 1½ month high overseas since US manufacturing bustle in Sept advanced to its highest peak in 13 years. The rupee had ended 22 paise higher at 65.28 versus USD on Friday.

The fall in rupee might also be based the fall in the FX reserves. After making record highs week after week, As per the RBI data, the foreign exchange reserves plunged slightly by USD 262.3 million to USD 402.246 billion in the week, due to fall in foreign currency assets, In the previous week, the FX reserves HIT a record high of USD 402.509 billion.

Meanwhile, Benchmark indices opened higher on Tuesday following the positive cues from the Wall Street’s record closing on last week ended Friday.  The benchmark Sensex rose as much as 245 points to hit at 31,528, while the nifty ended at 9864 in post morning hours, Tuesday.  The 2-day bi-monthly policy meeting of the RBI will be starting from today. The result of RBI policy meet, macro-economic data points together with overseas investor’s investment trend will dictate the Indian stock markets this week.

Shares of Oil Marketing Companies Declined as Oil Prices Rallied.

Shares of oil marketing companies (OMCs) have fallen this month since oil prices rallied at 26-month high, which could reduce their margins. Shares of Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd, (HPCL) and Indian Oil Corp. Ltd (IOC) were down 11 to 12% in September month, but on the other side exploration companies such as Oil India Ltd and Oil & Natural Gas Corp. Ltd (ONGC) have rallied 22.25% and 9.27% this month.

As per Bloomberg data, Brent crude prices rose 10.46% in this month. Brent oil prices were on the edge of 26-month high hit on Wednesday on supply worries in spite of threats from Turkey that it could reduce crude exports from Iraq. However, Brent crude was 1 percent down last day, after hitting previously at 59.49, its highest since July 2015 and more than 34 percent above a 2017 low.

Rise in oil price may further affect input cost for many companies which depend on fuel. It is afraid, if oil prices stay at structurally elevated levels, input costs of companies will enhance. However, it will also cause a high import bill, which may impact the current account country’s deficit.

Oil has been in a bullish trend recently on calls of rising global growth and a simultaneous rise in world oil demand. The global economy will expand more rapidly next year while still facing challenges, like high income inequality and low inflation, low productivity. The IMF forecast, issued in July projected global growth at 3.5 percent this year and 3.6 percent in 2018.

Reliance Home Finance zoomed 5% to hit upper circuit on Debut

Reliance Home Finance (RHF) IPO made its first appearance on the exchanges at Rs.102.10 and surged 5% to hit the upper circuit at Rs 107.2 on Friday morning. Reliance Home Finance Limited is the demerged home finance business of Reliance Capital. The stock traded with volumes of 6.24 lakh shares on the NSE.

Reliance Home Finance had AUM (assets under management) worth Rs 13,022 crore as of June 30. Home loans and affordable housing loans contributed 35% and 19% of its portfolio, respectively, while riskier segments such as loan against property and construction loans accounted for 22% and 24.

Shares of Reliance Capital Ltd declined by more than 4.5% to hit the day’s low at Rs 687.5, whereas the shares of Reliance Home Finance listed at the upper circuit of Rs 107.2. The Housing Finance Company managed Rs 13,022 crore AUM as of June end, and is targeting Rs 50,000 crore in assets by financial year-2020.  Reliance Home Finance reported a 58% surge in total income at Rs 374.00crore in June quarter.