Stock markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the FMCG sector and realty sector witnessing maximum buying interest.
The BSE Sensex is trading up 60 points (up 0.2%) and the NSE Nifty is trading up 15 points (up 0.1%). The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 65.70 to the US$.
Vedanta share price and Electrosteel Steels share price are in focus today as the National Company Law Tribunal’s (NCLT) Kolkata bench approved a Rs 53 billion resolution plan for Electrosteel Steels.
The development paves the way for acquisition of Electrosteel Steels by the local unit of London-visited Vedanta Resources.
As per the news, the deal requires formal clearance from the Competition Commission of India and the Securities and Exchange Board of India, which is likely in the next couple of months.
Note the Electrosteel Steels was the first of the big defaulters to emerge from bankruptcy proceedings.
At the time of writing, Vedanta share price was trading up by 1.5%, while Electrosteel Steels share price was trading down by 5%.
Who will feel the pain of the falling rupee?In the news from currency markets, the rupee is witnessing selling pressure today and has hit a fresh 7-month low against the dollar. The rupee depreciation is seen on the back of worsening trade scenario and a fresh ripple of geopolitical tensions.
A depreciation in rupee means importers buying goods and services at a higher rate that earlier. This doesn’t bode well for a developing economy that relies heavily on imports.
Also, India imports most of its oil requirements. A rise in the dollar leads to a consequent rise in the import bill.
On the corporate side, companies who have taken foreign loans from abroad will be impacted. The repayment obligations in terms of principal and interest will rise, leading to a dent in the cash flows and financials.