13 companies & stocks that will feel impact of rupee bleeding

NEW DELHI: Falling rupee has made traders worried sick. The recent depreciation has been resultant of confluence of factors at play viz. Geopolitical tensions, spike in crude oil prices, consequent build-up of inflationary pressures and quantitative tightening by Fed leading to a strengthening dollar and FII’s claw back to the safe haven dollar.

Typically, a weaker rupee does not bode well for domestic equity or debt markets as foreign portfolio investors’ returns from Indian assets reduce, prompting them to exit such investments. Moreover, with Indians being heavily dependent on imports of certain dollar-denominated commodities such as crude oil, a weaker rupee widens the Current Account Deficit and presents the risk of imported inflation.

“Lower rupee against dollar keeps import bills higher, pushing inflation even higher than it is now. Furthermore, higher inflation is detrimental to the overall market. If the rupee does not strengthen, FII outflows will continue, which is another negative factor for the market,” said Ravi Singhal, Vice Chairman at GCL securities.

However, there are some who are sensing opportunity in this crisis.

“We believe as long as the INR sees orderly depreciation, the direct impact on the market may not be significant. In fact, we believe at current level, it provides opportunity for FIIs to become constructive on Indian Markets, as INR & Financial Markets both have corrected and is currently offering value to long term FII Investors,” said Niraj Kumar, Chief Investment Officer at Future Generali India Life Insurance.

Anyway, most see the fall in rupee as a short-term phenomenon, and any impact will be for a limited duration only. In the long term, the impacts will be negligible.

Good for some, bad for some
Nonetheless, there are some companies that will sure feel the impact of the fall in rupee, both negative and positive. We can already expect a similar impact on their stock prices as it will directly impact heir financial performance.

“Strong dollar is good for export-oriented IT and other stocks like TCS, Rajesh Exports, and Bharat Forge, but bad for import-oriented industries like Oil, Gas, and Chemicals. It is also bad for companies like Page Industries and Jubilant Foods, which pay foreign companies royalties for franchises in India,” Singhal said.

Manoj Dalmia, founder and director, Proficient Equities, said, companies importing commodities like oil, gas, FMCG suffer from depreciation of the rupee. This will be visible in the stock price of respective stocks. According to him, below mention companies will feel the impact:

-Positive effect: Metal Stocks like Tata Steel, JSW Steel, NALCO; It stocks like Infosys and Wipro
-Negative Effect: Indigo, Adani Wilmar (Edible Oils), Reliance (Petroleum Products)

Below are what other analyst feel the fall in rupee will impact markets:

Jitendra Upadhyay, senior Equity Research Analyst, Bonanza Portfolio
Falling rupee has increased the cost of raw material imported from other countries sectors like chemical, metals and automobile sectors. Companies with huge dependency upon imports will be hit by rise in the cost of input such as power companies’ dependency more on coal that will link to international prices, pharmaceutical and information technology that earns a high percentage of their total revenues in dollars. Every dollar earned through exports means more rupees added to the bottom line.

Niraj Kumar, Chief Investment Officer at Future Generali India Life Insurance
From the sector standpoint, clearly export oriented sectors such as – IT & Pharma stand to benefit from depreciating rupee. Besides Metals too would be favourably placed. On the flip side, a depreciating INR along with elevated commodity prices may add to the pressure on margins in commodity importing sectors such as Auto & consumer durables.

Ravi Singh, Vice President and head of Research ShareIndia
Auto, Real estate, Infrastructure sectors would be worst hit by rupee depreciation whereas IT and Banks will have a positive impact.

Vikas V Gupta, CEO & Chief Investment Strategist at Omniscience Capital
The market could have a short-term impact, but it looks like the Indian markets have become more immune to that as well. Over a long-term we see not much impact. Also, the INR is likely to be stable once the FIIs settle down.