Indian rupee to get stronger, NRIs should remit now
If you're a non-resident Indian (NRI) and looking to remit a handsome amount back home or planning to buy a property or invest in any venture, the time is now.
Going by views of analysts and industry executives, the Indian currency is likely to strengthen further against the US dollar -- thereby against the UAE dirham, because the Emirati currency is pegged to the greenback -- in the wake of Reserve Bank of India's (RBI) decision to cut interest rates last week, and may strengthen as much as 1.1 per cent.
"Rupee has firmed up a bit more than we had expected it to. There hasn't been radical movement, and we feel that it might not breach 63.30 against the dollar for the time being. However, we can expect the Indian currency to hit 64.30 against the dollar in the month of August, as stocks across the globe are getting set to adjust with the third quarter earnings. In Indian markets, too, half yearly results are key to determine the trend of large cap and mid cap giants," commented Adeeb Ahamed, CEO of LuLu Exchange.
The rupee has already been one of best performing emerging market currencies this year as it has hitherto increased by nearly 7 per cent, thanks to inflows for foreign funds into the Indian equities.
The rupee was trading at 63.609 against the dollar and 17.311 against the dirham on Sunday afternoon. It hit a high of 63.58 last week against the US dollar, its highest level since July 2015.
The Indian central bank last week reduced the repo rate after a gap of almost 10 months by 0.25 percentage points to six per cent.
Aditya Pugalia, an analyst with Emirates NBD Research, agrees with Ahamed. "With the economy continuing to make progress and the RBI shifting gears to boost economic growth, we expect the Indian rupee to continue to strengthen, albeit at a slower pace," he noted.
The rupee, according to Pugalia, is among the best performing emerging market currencies in 2017 having rallied 6.8 per cent year-to-date. While the broad US dollar weakness has helped, the primary driver has been inflows from foreign institutional investors into Indian equities. In the first seven months of 2017, foreign institutional investors have bought stocks worth $8.9 billion.
Promoth Manghat, CEO, UAE Exchange, echoes Manghat and Ahamed, saying rupee could climb further in the near-term as the RBI's interest rate cut lures more inflows into local market.
"The break in USD/INR below 64 means the RBI will not hinder the inflows, leading to further near-term rupee appreciation. Asia's third-largest economy has borrowing costs placed at the lowest since 2010, spurring growth and earnings along with encouraging foreign investments of about $8.8 billion in local stock this year. Economic and political stability along with reform momentum attract inflows, which will further appreciate the rupee. The rupee reached a two-year high after the RBI's decision on Wednesday. Meanwhile analysts are predicting INR to be range bound at 61-65 range per dollar by March next year."
Don't hold back
Since rupee is expected to strengthen further, NRIs have been advised not to hold back their liquid assets and instead go ahead and invest in India.
"The interest rates for deposits will not be tampered with in the near future as the banks have already figured out the NPA (non-performing assets). Adding to it, consolidation of banks are on the cards in India. Therefore, there is no point in holding back liquid assets. In fact, it is the right time to invest in India as the entire world acknowledges it to be one of the fastest growing economies," Ahamed advised.
On a more pragmatic level, Ahamed believes Indian expatriates need to be educated on investing in their home country. "I believe there is ample opportunity for expats to invest in a number of developmental and infrastructure projects that will be in good stead for the country as well as create a fallback for them when they return home."
Manghat said it's still a good time for NRIs to remit funds to NRE accounts as rupee is expected to range between 61 and 65 per dollar.
"Since the GCC is mostly US dollar denominated, the interest rate reduction in India or minor appreciation in rupee value isn't going to impact much to the fund transfers of a non-resident Indian, who will anyway enjoy an overall benefit. Also capital markets are doing well in India. NRIs should take advantage of the same and look beyond NRE deposits to invest in the capital market," Manghat advised Indian expatriates.
He predicts rupee's appreciation should comparatively reduce the remittance volume. But the regular remitters will send money for family maintenance irrespective of currency fluctuations. It is the opportunist remitters, who wait for currency depreciation to take advantage of getting more money in conversion while sending money to India.
https://www.khaleejtimes.com/business/economy/indian-rupee-to-get-stronger-nris-should-remit-now
How strong macro economic fundamentals and stable rupee are helping Indian firms and banks
Indian companies and banks are able to mop up money from overseas markets at lower interest rates these days, thanks to the country’s strong macro-economic fundamentals and a stable currency. The total amount raised by companies and bonds in dollar markets so far in 2017 has hit $11 billion, which is way above the $8.3 billion picked up in 2016. In the last seven days alone, close to $2 billion has been picked up by banks and firms. Arun Saigal, MD (global finance), Barclays India, said there is strong appetite among global investors for Indian paper, a reflection of the strong macro-economic environment. “We could see spreads on Indian paper decline as a result,” Saigal said. Last week,
Vedanta Resources priced its $1 billion dollar bond issue, with a tenure of seven years at a coupon rate of 6.125%. This is far finer than the 6.375% that it paid for money that it raised in January, for a shorter tenure of five and a half years, Bloomberg data shows. Moody’s had given Vedanta’s issuance a B3 rating.
In June,
Adani Ports and Special Economic Zone priced its 10-year dollar bonds at just 195 basis points over the benchmark treasury yield with a coupon rate of 4%. That was better than the rate of 215 basis points over the 5-year treasury which the company paid to raise five-year money or a coupon rate of 3.95%. APSEZ to be sure, commands a good rating; it was rated Baa3 by Moody’s. Ananth Narayan,Head(financial markets), Standard Chartered Bank, points out the India story is a strong one with respectable growth, low inflation and a strong rupee. “Given the political stability and progress on reforms such as GST, bankruptcy code, the outlook is also perceived to be bright,” Narayan says.
The scarcity value attached to Indian paper is high. Although $11 billion may seem a big amount from an Indian perspective, it is small compared with issuances from other countries, especially China. Last week, private sector lender Axis Bank priced its five-year dollar bonds at 130 basis points over the 5-year US Treasury yield. This is 30 basis points lower than the spread —over the US treasury — of 160 basis points that it forked out for a 5-year dollar bond in June 2016.
Canara Bank recently picked up $ 400 million of 5-year money at a coupon rate of 3.25% ; in 2013, the state-owned bank paid as much as 5.25% for bonds of a similar tenure. Both lenders were rated Baa3 by Moody’s. Foreign portfolio investors (FPIs) have so far bought close to $17.7 billion of rupee debt in the local market. The investment limits in corporate bonds have already been fully utilised. The currency has also been on a surge this year with the rupee strengthening close to 6.65% against the dollar in 2017.
http://www.financialexpress.com/eco...-rupee-helping-indian-firms-and-banks/797135/
Rupee may hit 60 against the dollar by 2017-end: Mark Mobius
Mumbai: Mark Mobius, executive chairman of Templeton Emerging Markets Group at Franklin Templeton Investments, expects the National Stock Exchange’s Nifty index to
double from its current levels of around 10,000 points within the next three or four years, on the back of better economic growth, rational interest rates and more inflows from foreign and domestic investors.
In a phone interview from Singapore on Thursday, Mobius said he expects the rupee to appreciate further to around Rs60 per dollar by the end of the year. Even as the Indian market raced to record highs, he said Franklin Templeton did not cut its India holdings, and is particularly interested in the small and mid-cap Indian stocks. Edited excerpts:
It took the Nifty nearly 10 years to reach 10,000 level from 5,000 level. How long until we reach the next milestone of 15,000?
In the case of the Nifty-50, I would say you could probably double from where you are now within the next three or four years. This would be due to a combination of things. One would be the high growth rate of the country, a more rational interest environment, where interest rates are more in line with what the market is able to pay. Also, you will see the foreign reserves of the country will continue to grow. In addition, if liberalization continues, you will see much more foreign investment coming in, in addition to the domestic investment,
Indian markets are trading at record high levels. We saw FIIs going easy on Indian equities in July. What has been your strategy of late with Indian shares? Are you adding more or are you cutting your holdings?
We certainly have not cut down on India because India is a very, very important part of our portfolio. If you look at the Asian small cap funds that we have, in particular, India is the largest weighting that we have. We continue to hold Indian stocks and buy when it is appropriate. When money comes in, we add to those position, but we are certainly not willing to sell at these levels.
Earnings growth is still elusive. When do you think earnings growth will return for Indian companies?
It is a matter of what category are you looking at. In the case of small and medium cap stocks, earnings growth has been pretty good. You must remember all these stocks will be graduating up into the large cap arena. I would not worry too much about that.
Do you think we could see a correction in the near to medium term in the Indian market, or do you think the rally will continue to hold good for a while?
There will be a correction on the way, because you’ve seen almost a continuous rise from early this year. Markets just shot up continuously. Whenever you have that kind of a situation, you can expect a fall back. It can happen any time, it just depends on what the trigger is.
Where do Indian markets stand in your preference order among EMs and why?
India is among the top three. China, India and Thailand are the top countries that we have right now.
Do you think US markets are overvalued—and to that extent money could flow to EMs?
The US markets continues to rise. I am surprised that people talk about a downturn in the US market, but S&P has not come down at all. That does not mean that money is not going to go to the other markets, because just remember that when people make profits in the US, they want to diversify. Many of them are underweight emerging markets generally.
The rupee is at a two-year high. Did you see this coming? Where do you see the rupee heading from here?
I see the Indian rupee continuing to get stronger and probably hit Rs60 against the US dollar by the end of the year on the back of growth in India, strong and rising reserves. If you look at the price parity in India, it is not overvalued.
The market is largely supported by domestic money? Do you think this is set to grow?
As interest rates come down, as deposit rates come down, people will begin to look at other alternatives, other ways to make money. That will also drive people to equity markets.
Cyclical, consumption, defensives—what is going to be the theme for Indian markets for the next year?
Right now, it is very much the consumption story. But I think going forward it is going to be an infrastructure story, because I think the Indian government realizes that they are far behind China in infrastructure, and something has to be done about that. The part of it comes from privatization of the state-owned enterprises, part of it will come from raising money for infrastructure projects, and of course, the way you do that is by making it safer for infrastructure investors to go into the market.
What are your thoughts on reforms such as demonetisation and GST (goods and services tax Act)? What is on your wish list on more reforms?
The demonetisation did not turn out to be as bad as I expected. When it first came in, I thought this is clearly going to have a bad effect on the economy. I think it is not as bad as expected. The good news is that it has tuned in people more into electronic payments, which is good for the economy to speed things up. I think the challenge going forward for (prime minister Narendra) Modi is going to be that the GST implementation goes through without state governments introducing new taxes and new levies, which could be very detrimental to the whole system.
The next wish list is general relaxing of foreign investment restrictions. That will free up a lot of capital to come in.
Which are your favourite sectoral bets in India at this point?
Currently, the small and mid cap stocks are of interest to us. Among individual sectors, I would say diversified companies, private small banks, materials, and chemical companies. We also like automobile tyres.
What are your thoughts on state-run banks after the recent crackdown by RBI on bad loans?
They look good now. We are not too worried about the bad loans for the state-owned banks.
What is the biggest risk to Indian markets right now?
I think the geopolitical risks. There is stress with China, there is some stress with Pakistan that still continues. If you have an outbreak, it will not be good for the markets.
http://www.livemint.com/Money/QvqOR...gainst-the-dollar-by-2017end-Mark-Mobius.html
NTPC seeks licence to set up charging stations for electric vehicles
State-controlled NTPC Ltd is exploring the possibility of securing a national licence for setting up charging stations for electric vehicles across states.
Currently under The Electricity Act, 2003, a distribution licence is required to distribute power from the respective state electricity regulatory commissions (SERCs).
India’s largest power generation utility is seeking a pan-India licence as it will help scale up its EV charging business rapidly in the face of emerging competition.
The EV business assumes importance for NTPC due to its lucrative market potential of around 90 billion units of power. With the current installed power generation capacity and projects under construction expected to meet India’s electricity demand till 2026, NTPC is scouting for new growth areas.
“We are trying to get a common licence. Electricity can be sold by a discom, a licencee or a franchisee. All three models are there. It is a licenced activity. We will try to work it out if it is possible to have one licence for the whole country. We are looking for a country-wide licensing. If that happens we will be able to set up the charging stations very quickly,” said a senior NTPC executive, requesting anonymity.
Mint reported on 10 March about how NTPC was
exploring an EV business to help create the demand for electricity generated by its plants and keep pace with the fast-changing power sector.
“This is a very good, growing business as the demand for electricity will be created. It has a very good synergy with us because we can start with the charging part of the business quickly. Later on we can get into battery and other associated businesses,” added the NTPC executive cited above.
This comes in the backdrop of ambitious government plans for a mass- scale shift to electric vehicles by 2030 so that every vehicle on Indian roads by then—both personal and commercial—is powered by electricity.
Any shift to electric vehicles will also help cut both air pollution and fuel imports.
“What we have planned is to have battery banks wherein we will be swapping batteries. Basically it will be an energy business for us with charging from the renewable energy sources,” said another NTPC executive who also did not wish to be identified.
NTPC plans to set up battery swapping stations wherein recharged batteries will be swapped with the batteries drained of charge.
The state-owned utility is working on a plan to bring down the cost of setting up these charging stations by half to around Rs1 lakh each.
In addition, NTPC wants to contribute significantly to India’s plans to set up 100GW of solar power capacity by 2022.
The utility wants to supply electricity from 10,000 MW of solar power capacity that it is setting up on its own and buy 15,000 MW on behalf of the ministry of new and renewable energy.
An NTPC spokesperson in an emailed response confirmed the development, saying, “Yes, NTPC is exploring various options in the area of EV charging station business.”
Experts believe that such a national licence for EV charging stations will be a shot in the arm for NTPC.
“The idea of a comprehensive national retail supply licence is going to be big a booster for NTPC’s business plans. It requires comprehensive review of existing laws and regulations given the concurrent nature, content and carriage segregation issues and developing licence provisions for a specific activity such as charging EVs,” said Sambitosh Mohapatra, partner, energy and utilities at PwC India.
http://www.livemint.com/Industry/Cm...to-set-up-charging-stations-for-electric.html