Kolkata\Mumbai: The Reserve Bank of India has capped banks’ net open positions in the rupee at $100 million at the end of each business day, tightening its oversight in the foreign exchange market as the currency slid to record lows.

In a notification issued Friday, the central bank asked authorised dealers of foreign currency to comply with the rule by April 10. The cap will be on their open position on the onshore deliverable market.

“Traders must be long on the dollar in a large way. This regulation basically curbs speculative positions of a bank, which will in turn reduce pressure on the rupee,” said a currency trader at a private sector bank.

“This is called the overnight open position which traders are allowed to keep in respect of all currencies involving the rupee. For a large bank, these positions can usually be at around $1 billion both in onshore and offshore markets,” he said.

RBI prescribes limits for open positions involving the rupee for exchange rate management and orderly development of the market, depending on market conditions.

The rupee has depreciated 3.5% since the start of the war and nearly 10% in this fiscal year. High crude oil prices are clouding the outlook for the local unit, with traders now expecting the rupee to touch 96-97 per dollar if oil prices remain around $115 per barrel.
“It has now been decided that authorised dealers shall ensure that their NOP-INR positions in the onshore deliverable market shall be maintained within $100 million at the end of each business day,” RBI said Friday in its master direction on risk management and inter-bank dealings.

Mumbai: The National Asset Reconstruction Company (NARCL) is set to take over the Rs 1,000 crore debt of specialised equipment maker Kay Bouvet Engineering after its Rs 130-crore offer did not receive a challenging bid, people familiar with the details said. This acquisition could be the last for the government-backed bad loan aggregator this fiscal.

Banks led by IDBI had sought a challenge bid to NARCL’s Rs 130 crore offer earlier this month, with due diligence for prospective bidders ending on March 23.

No bidder came forward till the end of the day on March 24, the final day for bids in the Swiss challenge auction, after which banks are moving ahead with the transfer to NARCL.

The NARCL offer means a 13% recovery for banks and will be in a mix of 15% cash and the rest in security receipts to be redeemed on recovery.

Kay Bouvet is a heavy engineering company engaged in the design, engineering and manufacturing of specialised equipment for strategic industries such as nuclear energy, power, defence and space. It has two manufacturing facilities in Maharashtra and Haryana.

Mumbai: ICICI Securities (ISec) said India’s benchmark Nifty is better insulated from a potential oil shock triggered by the ongoing Gulf conflict than the broader small-cap and mid-cap universe, as the index has higher exposure to energy suppliers such as coal, electricity and upstream oil companies that could benefit from rising prices.

The brokerage said suppliers of energy in the Nifty, including companies in coal, electricity and upstream oil, will benefit from higher realisations. Meanwhile, demand for coal and electricity is likely to increase as users shift away from oil and gas as fuel inputs.

ICICI Securities said oil and gas suppliers, such as oil marketing and gas companies-the most impacted-are largely outside the Nifty and are spread across the small-cap and mid-cap segments. Energy-intensive industrials such as chemicals, fertilisers and building materials are also concentrated in the small-cap and mid-cap segments and are significantly impacted by higher crude and gas costs.

Within consumption, sectors such as aviation, autos, and consumer goods could be impacted by higher input costs, although larger companies within the Nifty can pass on costs and consolidate market share.

The brokerage said services sectors, including IT, banks and financials, which account for a large weight in the index, do not rely much on oil and gas, limiting the overall impact.

U.S. stocks tumbled on Friday, with each of the three major U.S. indexes closing at their lowest levels in over seven months and the Dow confirming it was in correction territory as the month-long Middle East war continued to suppress risk appetite. Markets took little solace from U.S. President Donald Trump’s announcement that he gave Iran another 10 days to reopen the Strait of Hormuz or face the destruction of its energy plants, after Iran rejected his ‌proposals to end the ⁠war that ⁠began with U.S.-Israeli air strikes on Iran. Secretary of State Marco Rubio said the U.S. could achieve its objectives in Iran without the use of any ground troops and expected its operation to conclude in a matter of weeks, despite recent deployments of additional forces to the region. U.S. crude settled up 5.46% at $99.64 a barrel and Brent rose 4.22% to settle at $112.57 per barrel, but they were little changed on the week.

The Dow, S&P 500 and Nasdaq each suffered their fifth straight weekly decline, the longest such streak in nearly four years. The Dow is now down more than 10% from its February 10 record close, becoming the latest major index to confirm a correction, commonly defined as a drop of 10% from its prior high. The Dow follows the Nasdaq in crossing the correction threshold while the Russell 2000, ⁠which was ‌the first on the correction path, confirmed it last Friday.

“Clearly, the overall tone has turned very negative and now we have broken down into correction territory,” said Ken Polcari, partner and chief market strategist at SlateStone Wealth in Jupiter, Florida.

“In the end, I would view this as ⁠a big opportunity, but would not be surprised if we see a drawdown anywhere between 15% to 20% before it is over.”

The Dow Jones Industrial Average fell 793.47 points, or 1.73%, to 45,166.64, the S&P 500 lost 108.31 points, or 1.67%, to 6,368.85 and the Nasdaq Composite lost 459.72 points, or 2.15%, to 20,948.36.

The CBOE Volatility Index, considered Wall Street’s fear gauge, was up 3.61 points to close at 31.05, its highest close since April 21.
Megacaps were the biggest drag on the benchmark S&P index, with Nvidia down 2.2% as the biggest weight, while Amazon dropped 4%. Software shares were also under renewed selling pressure, and the S&P 500 software and services index closed at its lowest level since November 6, 2023. Along with pressure from Amazon, consumer discretionary stocks dropped 3.1%, the worst-performing of the 11 major S&P sectors, as cruise operator Carnival slumped 4.3% after cutting its ‌annual adjusted profit forecast. Fellow cruise operator Norwegian tumbled 6.9%. The surge in oil prices along with other products such as fertilizer as a result of the Iran war has fanned inflation fears and dampened expectations that the Federal Reserve and other central banks have room to lower interest rates. Money market participants are not pricing in ⁠any easing from the U.S. Federal Reserve this year, compared with expectations of two cuts before the conflict broke out, according to CME’s FedWatch Tool. Markets are now pricing in a roughly 25% chance for a hike of at least 25 basis points at the Fed’s October meeting. Philadelphia Fed President Anna Paulson acknowledged the risks to the economy from the war, but did not specify what it meant for monetary policy in the near term. U.S. consumer sentiment eased to a three-month low in March, raising concerns about the economy due to the Middle East war.

Declining issues outnumbered advancers by a 3.38-to-1 ratio on the NYSE and by a 3.62-to-1 ratio on the Nasdaq.

The S&P 500 posted 22 new 52-week highs and 27 new lows while the Nasdaq Composite recorded 25 new highs and 355 new lows.

Volume on U.S. exchanges was 18.13 billion shares, compared with the 20.4 billion average for the full session over the last 20 trading days.