India’s rupee declines for a 3rd week running

Bloomberg/Mumbai

Brokers monitoring the Bombay Stock Exchange’s Sensitive Index which rose 1% yesterday

India’s rupee declined for a third week on speculation the nation’s importers will step up dollar purchases to settle month-end bills.The currency extended its losses this month to 1.7%, the second-worst performance among Asia’s 10 most-used exchange rates, as a key gauge tracking the greenback’s strength rose the most in a week.India’s imports increased an average 17% in the three months ended March 31, accelerating after a 2.3% gain in the previous quarter, government data show.“Dollar demand is expected to pick up ahead of the end of the month as is typical,” said Sudarshan Bhatt, chief currency trader at Corp Bank in Mumbai. “That would pull the rupee lower from this week’s highs.”The Indian currency retreated 0.1% yesterday and 0.3% this week to 45.0150 a dollar. It earlier reached 44.8900, the strongest level since May 13.The Dollar Index, which tracks the greenback against the currencies of six major US trading partners, advanced 0.4%, the most since May 13.The rupee strengthened earlier yesterday on speculation rising corporate earnings will prompt overseas investors to raise holdings of the nation’s assets.Tata Power Co, India’s biggest non-state electricity utility, had said on Thursday that profits had increased 5.6% in the year ended March 31 to Rs20.9bn ($465mn).Offshore forwards indicate the rupee will trade at 45.61 to the dollar in three months, compared with expectations of 45.63 yesterday. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.The Bombay Stock Exchange’s Sensitive Index meanwhile rose 1% after Larsen & Toubro, the country’s largest engineering company, reported record fourth-quarter net income yesterday. Religare Capital Markets Ltd advised investors to buy L&T shares after the results.Indian shares advanced for a second day, paring a weekly decline, as a drop in commodities prices and better corporate earnings spurred investor confidence.The Bombay Stock Exchange Sensitive Index, or Sensex, rose 184.69, or 1%, to 18,326.09 at the close. The gauge declined 1.1% this week. The S&P CNX Nifty Index on the National Stock Exchange added 1.1% to 5,486.35 and its May futures settled at 5,479. The BSE 200 Index increased 0.9% to 2,260.30.The Sensex has declined 11% this year on concern higher borrowing costs will hurt corporate earnings. Stocks on the gauge are valued at an average 13.8 times estimated profit, down from 21.5 times in March 2010, last year’s high. The MSCI Emerging Markets Index is at a multiple of 11.2 times.“Time and again, the markets have managed to attract buyers at lower levels,” said Ravi Gopalakrishnan, the Mumbai- based chief investment officer for equities at Pramerica Asset Managers Pvt., the local unit of Prudential International Investments Advisers.“That tendency should remain unless we see macro-economic factors turning more negative.”L&T surged 3.6% to Rs1,652.25, extending yesterday’s 5.8% jump. The shares jumped 8.8% this week, the best performer on the 30-member Sensex. The stock was upgraded to “buy’ from ‘‘hold’’ by Suhas Harinarayanan, an analyst at Religare, with a 12-month price estimate of Rs1,900.Tata Power climbed 1.7% to Rs1,236.35 and its May futures settled at Rs1,239.10 on the National Stock Exchange. The company increased profit to Rs20.9bn for the year ended March 31 from Rs19.8bn a year earlier.The Sensex has retreated 3.5% since the central bank on May 3 raised the benchmark repurchase rate by half a percentage point to 7.25%, the most since July 2008, and Governor Duvvuri Subbarao predicted inflation will stay ‘‘elevated’’ until September.Monetary tightening in India will slow growth this year and help ease inflation to 6% ‘‘with an upward bias’’ by March 31, 2012, Subbarao said.