Federal Bank’s Paul Says Inflows ‘Positive’ for Indian Rupee

Roy Paul, deputy general manager at Federal Bank Ltd. in Mumbai, comments on the outlook for India’s rupee.

Three-month non-deliverable forwards for the currency gained 0.4 percent to 44.94 per dollar as of 11:34 a.m. in Singapore, according to data compiled by Bloomberg. The contracts reflect bets the rupee will weaken 1.5 percent from the spot rate of 44.26.

“Of late, the capital inflows have been huge and that is positive for the rupee. There is a global acceptance that India is a growing economy so that is taking root in the minds of investors.

“Oil prices at the current level are a dampener. Depending on the Gulf region and what happens there, the high oil price is a negative for the currency.

“The rupee will be around 45 against the dollar in three months depending on the capital inflows and developments in the Gulf.”

To contact the reporter responsible for this story: Khalid Qayum in Singapore atkqayum@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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Crude oil price will remain a key concern: Kotak AMC

Domestic market has turned volatile on aggressive crude oil prices. In the view of most analysts, India will have to deal with hiking oil rates and inflation numbers at the same time in order to keep the market steady. Alroy Lobo, chief strategist and global head of equity asset management at Kotak AMC feels that higher oil prices will weigh on market sentiments and will remain as a key concern till oil prices come off. In addition to that, global events have been priced into the market and as a result, the revenue estimates will be shaved.

Talking about sector specific growth prospects, he said that he is constructive on the IT and outsourcing service sector. “IT and outsourcing services should show continuous growth in FY12,” he adds. He was also optimistic about the growth of pharmaceutical sector in India.

Besides being neutral on banking sector, he is underweight on infrastructure, real estate and capital goods sector in India. He feels that inflows were weak due to lack of retail participation; however, he sees a fair degree of valuations in the midcap segment.

Reacting on the RBI’s interest policy update, he said, “RBI is likely to hike interest rates to 50 to 75 basis points this year.”

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