Plunging rupee won't deter markets from rallying: Experts

Moneycontrol Bureau

There is a widespread concern that the weakness in the rupee could prompt foreign institutional investors to sell Indian shares. But Gopi Suvanam, Founder, InvestWorks believes that shares could rally from here even if the rupee were to depreciate.

"There could be some amount of decoupling because some of the dollar strengthening is not because per se emerging market (EM) weakening but it is purely a supply demand tactic," he explained.

He sees rupee touching 62 over next couple of months. Today rupee further depreciated and ended at 56.76 against dollar from 56.50 on Friday.

Most experts pointed that rupee's depreciation against dollar has more to do with strengthening of dollar against most currencies than local factors. Rupee is not entirely alone in the quagmire that is in. We have the company of other emerging market currencies which are running current account deficits, so again it is the argument that if QE does taper out then the countries which are running large current account deficits will find it far harder to finance their CADs, and therefore, could see the currency come under pressure," Brijen Puri, head- markets, JP Morgan told CNBC-TV18 today.

Stock Indices continued to slide today following weak global cues and 50-month low May HSBC Manufacturing PMI data. The Sensex slipped another 150 points, to close at 19610.48, after shedding 455 points in previous session. The Nifty lost 46.65 points, to end below 5950 level at 5,939.30.

However experts believe that June series may not be as volatile as May and indices may even see some uptrend going forward. "Most fund managers are looking to take a vacation because it is a start of summer in Europe and US. So, they are more concerned about temperatures of holiday locations than about equity indices," Suvanam said. He feels that even market continues to fall the downside will be capped.

Although the immediate trend for the market will be down, markets would find some support sooner rather than later, observed technical analyst Sudarshan Sukhani of s2analytics.com

Stock corner

Infosys was among the top performers today, gaining over 4 percent on hopes that founder Narayana Murthy's return would put the company back on track to recovery. SP Tulsian of sptulsian.com said that Rs 2,550 will be a strong resistance for the stock.

"Those who have couple of months view can look for a price of Rs 2,600 plus also, but there is no point in playing for the short-term or maybe the near-term view on the stock either on the long side or short side," he advised.

In past few sessions there has been lot of movement in shares of the rating agencies such as CRISIL and Care Rating. "I am keeping positive view on CARE Rating as well considering their results which they have posted for FY13 though the results have been flat but because of the PE expansion having taken place in CRISIL - that is going to have its positive effect on the other rating agency stocks as well," Tulsian said.

On Reliance Industries which has seen high volatility in past one month, Tulsian said that the stock would move in range of Rs 780-845. "If you really have a one month view you can safely play within the range. If somebody can buy now with a one month view, maybe with the view of this June series can definitely see a price of Rs 820 again," he suggested.

Tulsian also preferred other stocks like Opto Circuits and Orbit Corp. He said that  Opto Circuits can fall as high as 50 percent in next two-three months time. He does not see more downside in Orbit Corp from here on.