Many big companies & India's most influential gain from weak rupee

[Srinivas]

Many big companies & India's most influential gain from weak rupee

NEW DELHI: Everybody loves a plunging rupee. Well, almost. The Indian currency's free fall may have spooked the markets, resulting in a great deal of teeth-clenching by policymakers and punters alike, but it's unlikely to keep many awake in the top echelons of India Inc.

Eleven companies that account for nearly 45% of the weightage of the BSE Sensex - ITC, Infosys, Tata Motors, Mahindra & Mahindra, Dr Reddy's Laboratories, Tata Consultancy Services, Sun Pharmaceuticals, Wipro, Bajaj Auto, Cipla and BHEL - benefit from a weakening rupee, according to numbers crunched by ET. The reason is simple: the total foreign exchange earnings of these firms are far greater than their forex spends. The more the rupee falls, the more these companies gain, other things remaining constant.

That's not all. Even Mukesh Ambani-controlled Reliance Industries - the country's largest exporter - gains from a weak rupee. While its forex outgo is more than its forex earnings, a significant part of its rupee earnings are pegged to the dollar. Therefore, a weakening rupee adds to Reliance's margins and profits, and most analysts cite an 'appreciating rupee' as a risk factor for the company.

The three biggest gainers are the IT heavyweights - TCS, Infosys and Wipro. At 65 to a dollar, the three will approximately gain an additional 5,700 crore, 3,600 crore and 2,700 crore, respectively, on net dollar earnings for 2013-14. Among the country's big business groups, the Tatas, thanks largely to TCS and Tata Motors, stand to gain from a depreciating rupee. "A weaker rupee would help India's exporters. Nearly 40% of the Sensex stocks benefit from the rupee's fall," said Amit Khurana, director (research) at Dolat Capital.

It's not just about individual companies. A raft of sectors such as IT, pharmaceuticals, hotels, textiles and automobiles benefit from a weak rupee as these are all net foreign exchange earners.

Many big companies & India's most influential gain from weak rupee - Economic Times

 

[Echo_419]

Well i think a weak Rupee may give a Boost to our exports
we export pretty less stuff

 

[Not Sure]

I made $1,200 just after Bernanke's statement, and laugh at those who loathe about the falling rupee. Instead, why not make some hay while tornado is still going strong?

 

[neehar]

its simple economics.when the currency of a country devaluates more the imports greater is the forex loss and more the exports greater is the gain. trade balance in india is negative.which means our imports are greater than exports which maily includes oil,gold,fertilizers etc.whoch means the loss of reserves would be greater.at the same time like the companies mentioned above the revenues of some companies .i.e which export earns profit.iff the net exports becomes greater than imports then we could gain huge profits and growth rates from this devaluation.now it depends on our political elite how they use this opportunity.one side this is an oppurtunity and on other side its a curse.depends on the capability of our ruling class!!in any case im sure that after next elections the economy stabilizes and improves.

 

[Lightningbolt]

Indian economy is experiencing hyperinflation. The currency has collapsed. Good riddance to India.

 

[T90TankGuy]

Indian economy is experiencing hyperinflation. The currency has collapsed. Good riddance to India.

the oracle has spoken . lets all hail the oracle.

 

[TopCat]

its simple economics.when the currency of a country devaluates more the imports greater is the forex loss and more the exports greater is the gain. trade balance in india is negative.which means our imports are greater than exports which maily includes oil,gold,fertilizers etc.whoch means the loss of reserves would be greater.at the same time like the companies mentioned above the revenues of some companies .i.e which export earns profit.iff the net exports becomes greater than imports then we could gain huge profits and growth rates from this devaluation.now it depends on our political elite how they use this opportunity.one side this is an oppurtunity and on other side its a curse.depends on the capability of our ruling class!!in any case im sure that after next elections the economy stabilizes and improves.

Complete bakwas...

Indian rupee fell because nobody wants the rupee anymore.

Chinese Yuan is undervalued because Chinese govt kept it low while everybody wants yuan.

Any gain due to rupee devaluation will be eaten away by other factors that economy will face due to devaluation like stagflation and high interest rate. Companies has to pay more for raw materials, high wages and high fixed cost. Besides buyers will negotiate to lower prices and pay you less dollar for the same amount of goods. As a whole India will receive less dollar than its pre devalued currency and CAD will widen further from trade.

Pakistan exporter gained nothing from rupee devaluation. A good example to look at.

 

[neehar]

Complete bakwas...

Indian rupee fell because nobody wants the rupee anymore.

Chinese Yuan is undervalued because Chinese govt kept it low while everybody wants yuan.

Any gain due to rupee devaluation will be eaten away by other factors that economy will face due to devaluation like stagflation and high interest rate. Companies has to pay more for raw materials, high wages and high fixed cost. Besides buyers will negotiate to lower prices and pay you less dollar for the same amount of goods. As a whole India will receive less dollar than its pre devalued currency and CAD will widen further from trade.

Pakistan exporter gained nothing from rupee devaluation. A good example to look at.

thats basic economics what i tried to explain.and its the same world wide..perhaps u've invented something new.try to understand first what my post is and then quote me...chinese kept it low by buying american bonds because they have a trade surplus which means they would get profits if their currency is lower than a dollar by exporting.the point which i precisely explained in #4..rupee devaluation is a different story.

the interest on u.s bonds decreases when the u.s govt buys them in bulk..in order to revive its economy american govt stopped buying its bonds and the interest on u.s bonds increased which attracted the fii s in the country who transferred their funds to u.s from india.chinese devaluation is completely different .they bought the u.s bonds with dollars and the amount of dollars was replaced by rmb the excess rmb printed caused the devaluation of their currency and thus they maintaind it low as they cud gain with their exports..hope this helps.if u still have doubts some vedios in youtube are explained clearly for beginners try them.
this is a gud one.if yt is banned try proxy
http://www.youtube.com/watch?v=cg17YTtsk2U

 

[neehar]

Complete bakwas...

Indian rupee fell because nobody wants the rupee anymore.

Chinese Yuan is undervalued because Chinese govt kept it low while everybody wants yuan.

Any gain due to rupee devaluation will be eaten away by other factors that economy will face due to devaluation like stagflation and high interest rate. Companies has to pay more for raw materials, high wages and high fixed cost. Besides buyers will negotiate to lower prices and pay you less dollar for the same amount of goods. As a whole India will receive less dollar than its pre devalued currency and CAD will widen further from trade.

Pakistan exporter gained nothing from rupee devaluation. A good example to look at.

on an additional note heres the trade balance between india and u.s.data is by u.s govt
Foreign Trade - U.S. Trade with India

it shows that trade surplus with u.s is increasing continously which means we're exporting more and more every year.and now with much lesser rupee and increased exports the net profits to india are gr8.with the decrease in rupee we have 2 problems apart from that advantage
1.our interests have increased
2.our imports which largely contains oil and gold..

but then as the exports value is increased and trade deficit decreases the rupee strengthens.this is basic economics..but then as i said it depends on our govts ability to use it to its strength.truth be said the present govt has a disease of indecisiveness which is a bad omen for market.once the elections next year are completed and govt changes iff modi comes to power nomatter what is does or not the market 'sentiment' becomes positive because he is decisive.he takes decision good or bad which is better than not taking any decision.

 

[shuttler]

The Iranians can avoid crying hard if they have done the same as suggested by the poster （#6）of this thread:

http://www.defence.pk/forums/world-affairs/264471-iran-agrees-take-all-oil-payments-india-rupees.html

On July 14, the rupee was trading at 59.88 to the dollar
Yesterday it once breached 65 but then settled at 64.31 grasping its breath for another tumultuous day for the weak currency
Since then, it has shed 7.4% of its value