While the macroeconomic context remains supportive of equities, investors should be cognizant of volatility which may arise in multiple pockets around the year. Staggered investments in equity would still be the theme for the coming year
The rupee slipped below 84 against the dollar for the first time last week on account of a spike in oil prices and equity outflows from India
Rating agency Crisil, the domestic arm of S&P, expects the India rupee (INR) rising about 56 against the US dollar by March, 2014. Key triggers: capital inflows resume and current account deficit (CAD) softens in 2013-14.
The Reserve Bank can buy USD 9 billion according to the balance of payments estimates and after assuming the Brent crude to be at USD 110 a barrel.
It will take India some tough decisions and several years before it can think of going back to a growth era of 8 per cent and more, which was an easy walk through till a few years ago, IMF has said.
Investor wealth soared by 27 per cent to around Rs 67.7 lakh crore in 2012 with the stock indices gaining nearly 25 per cent on hefty capital inflows and of late a slew of reform measures even as concerns remain over economic growth and rising fiscal deficit.
The Government's recent reform measures will boost capital inflows which will propel the rupee to rise up to Rs 51.5 against the dollar by end of the current fiscal, according to the Centre for Monitoring Indian Economy (CMIE).
After appreciating over 110 paise on Friday due to stimulus measure announced by US government coupled with diesel price hike, the rupee is likely to trade between 54.30-54.80 to the dollar this week, say experts.
Standard Chartered upgrades its short-term rating for the rupee to "neutral" from "underweight", and revises its end-September forecast to 56 from previous forecast of 57.50, adding the cross has "likely" hit the high for the year.
The Reserve Bank of India (RBI) announced further measures on Monday to curb speculative trading in the foreign exchange market, but the move failed to halt the rupee's slide to another record low.
The rupee trimmed early gains on Tuesday as demand for dollars from oil importers picked up and choppy shares clouded the outlook for capital inflows.
The rupee edged slightly higher on Wednesday as better global risk sentiment bolstered hopes for capital inflows.
China's economy has surfed for years on a crest of hefty capital inflows, but the tide that brought gains in money supply is turning as global growth slows.
According to Alok Sama of Baer Capital, pressure on the rupee and cost of capital are two key concerns for Indian equities.
China will probably raise lenders' required reserves once again this month to soak up excess cash in the economy and tamp down on inflation, the official China Securities Journal reported on Thursday.
The Group of 20 financial chiefs will discuss this week destabilizing capital inflows to emerging market countries and collaboration with the International Monetary Fund to address the problem, Japanese Finance Minister Yoshihiko Noda said today