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Rupee gains amplify dollar returns of Indian market

India Inc’s biggest cos saw their re returns go up between January 1 and October 9.

, ET Bureau|
Updated: Dec 12, 2018, 07.59 AM IST
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For instance, HDFC dollar returns year-todate are up 8 per cent.
India Inc’s dollar returns since the beginning of the year have improved since the rupee started rising from the October lows but the return in rupee terms continues to outpace gains in greenback given the dollar’s outperformance till October.

An ETIG analysis shows that shares of most big companies of India Inc have risen in dollar terms since October 9 due to the rupee’s gains. The Nifty’s rupee returns have lagged the dollar returns in the two months. But since January 1, Nifty returns in rupee terms are still better than dollar returns. For instance, the Nifty has returned 1 per cent since January 1, while the dollar returns have been a negative 10.4 per cent.

ET tracked the dollar and rupee returns of the Nifty and the major companies in its edition dated November 26 and showed how important dollar returns are given that foreign institutional investors own 44 per cent of the Nifty free float. India Inc’s biggest companies saw their rupee returns go up between January 1 and October 9 when the rupee fell to an all-time low of Rs 74.4 to the dollar, but their dollar returns got affected very badly. The rupee’s recovery from the October 9 lows till late November improved the dollar returns somewhat though the rupee returns were still stronger for the year.

Latest data analysed by ETIG show that the Nifty’s dollar returns have improved till December 11. Dollar performance of key India Inc heavyweights with high FII holding have also improved compared with the year to date performance till October 9 and till late November.

For instance, HDFC dollar returns year-todate are up 8 per cent. It has gained 21 per cent in rupee terms. But till October 9, its dollar returns were a negative 9 per cent and rupee returns were only 7 per cent higher. Hindustan Unilever’s dollar returns were a negative 17 per cent from January 1 to October 9, and rupee returns were also a negative 2 per cent. But year to date, its dollar returns are a positive 18 per cent and rupee returns are up 33 per cent. HUL shares have also climbed in this period.

Comparison of the performances of the largest 15 FII-held companies shows IT companies such as TCS and Infosys have been the top gainers in the year till date, but the trend has reversed over the past two months — since the bounce back in rupee against the dollar — from 74.4 on October 9 to 71.9 currently.
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Since October 9, each of the 15 companies have gained market capitalization in terms of dollars as well as rupee except for the three IT majors — TCS, Infosys and HCL Tech, which have lost 1 per cent, 3 per cent and 7 per cent, respectively, in terms of dollar m-cap. M-cap erosion in rupee is even higher.

India’s largest auto company Maruti Suzuki has been the worst performer in the year till date with a 33 per cent fall in dollar m-cap, though it has gained 13 per cent in the past two months.

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