Rupee Continues To Haunt Economy

When I put my thoughts together for the preceding issue of the magazine, I had asked you to reflect on what could be the most worrying factor for investors in the present circumstances. It didn’t really need any kind of rocket science to zero in on the correct answer to that question. It had to be the uncontrollable and rapid depreciation of the rupee (INR) in value against the dollar (USD). The entire financial eco-system carried this concern through for those 15 days or so that have passed. As I sit to write my fortnightly communication to you this time around, I am sure, there is little else on the minds of all, than the precarious condition in which the rupee stands even today.

Macro worries provide a good amount of fodder for discussions and debates on what is good and what is bad for the economy. But if you look really deep into these discussions, you will find that most of it is only about fixing the blame and not the problem. How far do these discussions take us? Do they really help in curbing the problems? In my view, they may only help partially in solving the problems. Given the globally encompassing economic issues that we face today, no single act or measure can help us in putting things in order. More importantly, there cannot be a quick fix solution to these problems. It will take time, a rather good amount of it, to put things back in place and lead a peaceful economic life.

In the mayhem that surrounds us today, no one organisation in singularity - be it the government or the Reserve Bank of India (RBI) - can be expected to work out wonders. Efforts would have to be made in tandem by understanding the broader needs of the economy to put it back on track. The first obvious task on hand is to stabilise the rupee at a level more comfortable than where it stands today. But this itself is turning out to be a big one for either to handle. The government has been taking various measures to control the overall situation. From curbing gold imports to opening up sectors to foreign direct investment, it has upped the ante on damage control. But, there still seems to be no respite.

The RBI, on its part, has tried to stem the outflow of the dollar by squeezing liquidity. In situations like these, the regulator will surely be forced to take some more drastic steps, including a hike in interest rates from the present levels. Consensus is, this will happen pretty soon. Not a very healthy sign of things to come; but as I said, it is the circumstances which warrant such a harsh decision. It is better to get over with the pain now, than to prolong it and suffer later.

All this leads to one basic question that I am sure our readers would want us to answer for them – What, as investors do you do in these circumstances? The most important step according to us would be to identify the sectors that are likely to benefit from the falling rupee as also those which are likely to go down with the rupee. This issue of the magazine makes an effort to present to our readers the six sectors that are likely to either benefit or be hurt with the rupee depreciation. Our team has identified six such sectors which will be the most impacted ones due to the depreciating rupee and given you the reasons for should investing in stocks from these sectors or chucking out some from the ones which are likely to be on the losing end.

Every time the markets go up or down, there are talks about what led to the move. Does the movement of the indices really indicate the true nature of the market direction? Do all stocks move in a particular direction and lead to the broader move? We have tried to break this myth in a special report. Corporate results aren’t panning out too well. Read the early signs which should help you build your expectations accordingly. And finally, since we are talking about the RBI’s actions, here is a special report on what you could expect in the ensuing monetary policy meeting.

As always, we bring to you two stock picks to add value to your portfolio. The Choice Scrip this fortnight is a Tamil Nadu-based home appliances company Butterfly Gandhimathi Appliances and the Low Priced Scrip is Ion Exchange. Both these companies have their own fundamental strengths and can go a long way in adding an alpha to your portfolio. The usual sections constitute the Hot Chips and Gossip, along with our expert panel answering your queries regarding financial planning and taxation.

Do write in to us at comment@dsij.in to let us know what you thought of the issue. We would be more than happy to take note of your suggestions in order to improve our offerings.