The rupee fell to a record low against the dollar , escalating worries about the current account deficit and complicating the task for policy makers looking to revive an economy that grew at its slowest in a decade in 2012/13.
“A weak rupee can revive a number of past woes, upset the easing inflation trajectory, raise CAD financing concerns and up the currency risks for offshore borrowers. This might also raise another hurdle for the central bank for cutting rates,” said Radhika Rao, an economist with DBS Bank in Singapore.
Though export focused firms are likely to benefit from the sharp slide in the currency. The rupee weakness is broadly a negative for stock markets .
Below listed are few stocks which tend to lose or gain the most due to falling rupee value in international market.
1. Reliance Industries: Margins at India’s biggest energy company may go up by 69 basis points on 1 per cent depreciation in the rupee. Sanjiv Prasad of Kotak Securities said RIL’s pricing is in dollar terms, so it stands to gain as rupee depreciates. Among other energy companies, Cairn India’s margins are likely to go up by 90 basis points. Aban Offshore’s margins are likely to go up by 102 basis points, while Essar Oil margins may go up by 100 basis points tracking rupee weakness.
2. Hindalco: The world’s largest aluminium rolling company may see its margins go up by 70 basis points. NMDC, India’s single largest producer of iron ore, may also see upsides, Mr Prasad said.
3. Infosys and HCL Tech are two IT outsources set to gain most from the falling rupee. Analysts say Infosys and HCL Tech may both see a 40 basis point gain in their margins.
4. Bajaj Auto: India’s third largest two wheeler manufacturer’s margins may improve by 30 basis points.
5. HPCL: Oil refiners will be the worst hit as rupee depreciates to record lows against the dollar. HPCL margins may go down by 65 basis points; BPCL’s margins may go down by 40 basis points, while IOC’s margins may fall by 30 basis points if rupee depreciates 1 per cent.
Source – NDTV and Reuters