Rupee Reverses Course, Slips Near 65/Dollar

The rupee reversed early gains to slip near the key 65 per dollar mark against the US dollar on Thursday. It hit a low 64.96 per dollar, a two-year low against the greenback. The rupee last traded around these levels when the country was struggling with slow growth and rising deficits.

Selling in the rupee has intensified over the last three days following China's unexpected devaluation of its yuan currency on Tuesday. The devaluation of the yuan has dragged down global equity and currency markets, leading to a sharp selloff in the rupee too.

Yuan's devaluation has sparked fears of a global currency war; analysts say continued depreciation in China's currency will increase the volatility in the rupee, pressure domestic exports and result in dumping of cheap Chinese goods in to India.

The reversal in the rupee led to a correction in stock markets too. The BSE Sensex, which had surged as much as 280 points in morning traded, was up around 150 points.

The rupee is now on course for a sixth straight day of loss. As of 11.00 a.m., the rupee traded at 64.93 per dollar.        

Coal India slips 1.3% post Q1 results

The company's Q1 consolidated net declined by 6.7% to Rs. 3,764 crore when compared with Rs. 4,033 crore in the corresponding quarter a year ago.

Coal India is trading on a slippery note a day after the company announced its Q1 results.

The company's Q1 consolidated net declined by 6.7 percent to Rs. 3,764 crore when compared with Rs. 4,033 crore in the corresponding quarter a year ago. Total income, however, rose by almost 5 percent to Rs. 20,965 crore from Rs. 19,980 crore.

According to reports, the government will be offloading 10% equity stake in the company through a public offer, as a part of its divestment scheme.

The stock had jumped to a high of Rs. 376, from where it tumbled to a low of Rs. 365 - down almost 3 percent in intra-day deals. The stock is now down 1.2 percent at Rs. 367. The counter has seen trades of around 142,000 shares as against the two-week daily average volume of around 449,000 shares on the BSE.

Meanwhile, the Sensex has gained 181 points at 27,694.

Government Hires Five Banks for Rs 9,500 Crore Indian Oil Stake Sale

Hong Kong: The government has hired five banks to manage a stake sale valued at up to Rs 9,500 crore in state-run Indian Oil Corp, IFR reported on Thursday, citing people familiar with the deal.

The government tapped Citigroup, Deutsche Bank, JM Financial, Kotak and Nomura to handle the sale of a 10 per cent stake in the oil company, which at current market prices would be worth up to Rs 9,500  crore, added IFR, a Thomson Reuters publication.

Indian Oil didn't immediately respond to a Reuters request for comment on the share sale.

Bharti Airtel, Idea, RCom Jump on Spectrum Sharing Norms

Bharti Airtel, Idea Cellular, Reliance Communication and Tata Teleservices shares gained between 1-5 per cent on Thursday as telecom operators will now be able to share spectrum with other service providers.
  The Cabinet yesterday approved spectrum sharing norms enabling operators to share their allocated spectrum with a maximum of two other operators in the same band within a licence area. Operators will have to pay an additional 0.5 per cent charges to the government for sharing spectrum.

Analysts say the spectrum sharing norms will benefit operators with bigger subscriber base as they can share the unutilised spectrum of other telecom operators. Spectrum sharing will also improve spectrum usage efficiency and will reduce call drops.

As of 9.38 a.m. Bharti Airtel was up 3.7 per cent, Idea Cellular traded 2.45 per cent higher, while Reliance Communication and Tata Teleservices were up 0.82 per cent and 4.49 per cent respectively

Gold prices recover in India, globally amid Chinese jitters

Standard gold touched INR 26,000 per 10g, a level not seen since July 17, but prices slipped on profit booking by stockists. Gold closed at INR 25,900 per 10g, a rise of INR 380 from Tuesday.

Gold prices in India rose to nearly a month's high early on Wednesday before profit taking pulled down the yellow metal from the day’s peak. Still, domestic gold prices are up by ~4% or INR 900 per 10 grams in two days.

Standard gold touched INR 26,000 per 10g, a level not seen since July 17, but prices slipped on profit booking by stockists. Gold closed at INR 25,900 per 10g, a rise of INR 380 from Tuesday.

Meanwhile, silver prices have jumped by 5% in two days and closed at INR 36,200 a kilo in Mumbai's Zaveri Bazaar.

Beijing’s devaluation of the yuan on Tuesday has sparked further worries about the health of the world’s second-largest economy.

Gold futures traded in New York ended sharply higher on Wednesday, registering a fifth straight gain in the precious yellow metal. Gold has risen in the past few days amid typical safe haven appeal among global investors, as stocks have taken a beating in the wake of the China currency devaluation shock. Gold has also benefited from weakness in the US dollar.

Gold has advanced by nearly US$30 since Friday, when it had closed at US$1,094.10 an ounce. On Wednesday, New York gold futures for December delivery gained US$15.90, or 1.4%, to trade at US$1,123.60 an ounce. Meanwhile, September silver gained about 20 cents, or 1.3%, at US$15.48 an ounce

Asian Shares Gain on Hopes of China Slowing Yuan Descent

Asian shares extended early gains on Thursday, taking heart from a late recovery on Wall Street and from efforts by China's central bank to slow the sharp descent of the yuan.

Losses for the currency early Thursday were slight after the central bank set a midpoint that was again lower than the previous day's, but not as weak as some feared.

Still, traders remain cautious about how low the yuan might go. Sources told Reuters some powerful voices in the government are pushing for an even deeper devaluation to help China's struggling exporters.

The People's Bank of China set its midpoint rate at 6.4010 per dollar prior to market open, weaker than the previous fix of 6.3306.  

The yuan opened slightly weaker but the gap between the guidance rate and the traded rate closed sharply as the central bank moved to stem a sharp selloff that saw the currency lose around 4 per cent in just two days.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.7 per cent, after U.S. shares rebounded and two out of three main indexes end in positive territory.

Japan's Nikkei stock index was up 0.4 per cent, shrugging off downbeat capital expenditure figures.

Japanese data released before the market open showed Japan's core machinery orders fell a greater-than-expected 7.9 per cent in June, down for the first time in four months.

The risk-averse mood after China's moves this week had heightened the appeal of safe-haven government debt, which then pushed down U.S. Treasury yields and pressured the U.S. dollar.

But benchmark 10-year note prices fell from three-month highs after a lacklustre auction, with the 10-year yield at 2.162 per cent in Asian trading, compared to its U.S. close of 2.130 per cent.

The dollar also suffered as investors pared back bets that the U.S. Federal Reserve's long-awaited interest rate hike would come as early as its Sept. 16-17 meeting.

Short-term U.S. interest rates markets indicated investors were pricing in no more than a 40 per cent chance that the Fed will raise rates next month.

"Pressure to unwind dollar long positions is mounting and focus is on how long this trend will continue. 'China risk' has dampened hopes for a September rate hike and upcoming data could further chip away at expectations for a Fed tightening," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

Against the yen, the dollar was about 0.1 per cent higher at 124.35. The euro was steady at $1.1154 after scaling a one-month peak of $1.1215 on Wednesday, helped by the unwinding of euro-funded carry trades in the yuan and other emerging market currencies.

In commodities trading, spot gold was down about 0.2 per cent at $1,122.20 an ounce after logging its fifth straight session of gains.

Three-month copper on the London Metal Exchange fell about 0.8 per cent to $5,145.50 a tonne, moving back toward the previous session's six-year low of $5,062 a tonne.

Crude oil futures gained overnight on lower U.S. crude stockpiles, but remained not far from six-year lows plumbed this week on fears that China's weaker currency would hit imports. U.S. crude was down about 0.1 per cent at $43.28 a barrel, while Brent added about 0.2 per cent to $49.75. 

Oil Prices Steady After US Stock Draw, but China Outlook Drags

Singapore: Oil prices were steady early on Thursday, supported by lower U.S. stockpiles and a firm demand outlook, but worries over China's economy continued to weigh.

A 1.7-million barrel drop in U.S. stockpiles last week helped to at least temporarily halt a price slide that has lasted since May and seen WTI and Brent lose over a quarter of their value.

A relatively bullish outlook by the International Energy Agency (IEA) on Wednesday also supported prices.

U.S. crude was trading at $43.27 per barrel at 0037 GMT, down 3 cents from Wednesday's close. Brent futures were 5 cents higher at $49.71 a barrel.

"Prices recovered overnight after initial declines, supported by an IEA announcement and a weaker dollar," ANZ bank said on Thursday.

The IEA said global oil demand growth in 2015 would be the strongest in five years, although it added that global oversupply would last through 2016.

But analysts said there were some doubts around a bullish demand forecast, especially in Asia where China's economy is showing increasing signs of weakness, with the devaluation of its yuan currency potentially denting demand for imports of fuel.

China's implied oil demand fell in July from the previous month amid a continuing drop in the nation's vehicle sales that could mute growth further in the second half of 2015.

China consumed roughly 10.12 million barrels per day (bpd) of oil in July, down more than 4 percent from June, although the implied use was up from 9.72 million bpd a year ago, according to calculations based on preliminary government data.

The month-on-month fall came as Chinese auto sales dropped 7.1 percent in July from a year earlier, the fourth straight monthly decline and biggest since February 2013.

Sensex Likely to Open on Flat Note; ONGC to be in Focus

9:00 a.m.: Rupee opens higher at 64.72 per dollar against Wednesday's close of 64.77.

8:27 a.m.: Below are the stocks which will be in focus today:

ONGC: ONGC will declare its first quarter numbers later in the day. The company is expected to post net profit of Rs 6,066 crore compared to Rs 4,781 crore during the same period last financial year. Net sales are expected to come in at Rs 23,607 crore against Rs 21,747 crore (YoY).

Coal India: Government has planned to sell its 10 per cent stake in Coal India. Stake sale would be through OFS route and government would raise Rs 23,400 crore from the proposed divestment. Government is in process of appointing five merchant bankers. The merchant bankers will advise government on the timing of OFS. Government currently holds 78.65 per cent in Coal India.

DLF: India's largest real estate developer, DLF will come out its earnings. The company is expected to post net profit of Rs 144 crore versus Rs 127 crore (YoY).

Dhanlakshmi Bank: Dhanlakshmi Bank announced its results yesterday. The bank reported loss of Rs 22.7 crore against profit of Rs 3 crore last year. Its net interest income jumped 9.2 per cent to Rs 83 crore from Rs 76 crore during the same period last year. Meanwhile on a sequential basis its gross non-performing assets jumped 8.45 per cent from 7 per cent. The results were below what the analysts had expected.

Reliance Infrastructure: Reliance Infrastructure reported net profit of Rs 330 crore compared to Rs 321.5 crore (YoY). The earnings were in-line with Street estimates.

Aurobindo Pharma: Aurobindo Pharma reported first quarter numbers which came in-line with the expectations. Its net sales came in at Rs 3,320.4 crore compared to Rs 2,911 crore. Its adjusted PAT was Rs 452 crore versus Rs 414 crore during the same period last year. Its EBITDA jumped to Rs 724 crore from Rs 658 crore (YoY).

8:20 a.m.: In the last four trading sessions, the markets have been facing the heat of selling pressure. The benchmark indices Sensex and Nifty have declined 2.7 per cent while the Bank Nifty has slumped 5 per cent.

8:15 a.m.: The foreign institutional investors sold Indian shares worth Rs 1,855 crore in the cash market and the domestic institutional investors sold shares worth Rs 1,223 crore.

In the derivative segment, the FIIs sold index futures worth Rs 2,500 crore and also sold stock futures worth Rs 330 crore.

8:00 a.m.: Back home, on the macro economic front, Retail inflation cooled in July, while factory output growth inched up in June, government data showed on Wednesday.

Retail inflation also known as consumer price inflation fell to 3.78 per cent compared to 5.40 per cent in June. A Reuters poll of analysts had estimated inflation to ease to 4.42 per cent in July.

Factory output growth in June rose to 3.8 per cent against 2.7 per cent in May. The analysts polled by Reuters had expected factory output measured by the index of industrial production (IIP) to rise to 3.5 per cent.

With this data, hopes of a rate cut were reignited.

7:50 a.m.: The Sensex is likely to open on a flat note in trades on Thursday as indicated by the Nifty futures traded on the Singapore stock exchange. Nifty futures traded on the Singapore Exchange also known as the SGX Nifty was down 0.04 per cent or 4 points at 8,374.

Meanwhile, other Asian markets edged higher in trade on Thursday, with investors cautiously watching China's next move after it allowed the yuan to decline for two straight sessions.

Nikkei advanced 0.2 per cent, Hang Seng was up 0.5 per cent, Taiwan Weighted was up 0.08 per cent and Shanghai Composite jumped 0.8 per cent.

Overnight, U.S. stocks rebounded in afternoon trading on Wednesday to end little changed as energy shares and Apple rebounded, offseting continued concerns about a slowdown in China.

The Dow Jones industrial average fell 0.33 points to 17,402.51, the S&P 500 gained 1.98 points, or 0.1 percent, to 2,086.05 and the Nasdaq Composite added 7.60 points, or 0.15 percent, to 5,044.39.