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BUSINESS, Business and Finance

Indian Rupee Devaluation

  • The volatile condition of the Indian market and the unstable and fluctuating situation of the Indian rupee
  • GST-driven policies
  • Profitable outcomes but the slow pace of volume growth

Several factors are contributing to the weak state of the Indian rupee, and in the coming months, it is anticipated that the volatile condition of the rupee will persist. Because of this volatility rupee becomes receptive to the foreign portfolios flows in the last few years and turn this phenomenon affect its debt and equity dimensions. It is also expected that in the first half of the financial year 2018, the Indian rupee will continue to stay back from the foreign portfolio flow’s standpoint. Evidently, any stakeholder that holds foreign stocks is unsurprisingly vulnerable to fluctuations in the exchange rate. The decisions regarding the performance of the portfolio, as well as hedging the foreign exchange risks, depend on the interconnectivity and correlation of currency returns and equity. Along with the fluctuating situation of the Indian rupee, the Indian market also affirms volatile market conditions that somehow impede the pace of volume growth and, in turn, impact the investors’ decisions to buy, sell, or hold onto the stock.

In past decades, the Indian economy has observed severe business and governmental trading policies and has confronted a higher GST. However, recently, GST rates have diminished, and for some specific business categories, it has become twenty-eight to eighteen percent. The government implements this rate immediately, and consequently, it simultaneously affects Hindustan Unilever Limited’s volume growth but only slightly. The stats depict volume growth of 11% for HUL after the cuts in GST-driven prices, but the rate is prolonged and will take time to be established. Nevertheless, HUL demonstrates overall growth in the company’s revenues by 14%, yet the risk-reward is still on the downside, and in the absence of a quick resurgence of volume growth, it features a risk of de-rating. The homecare industry is doing well in the Indian economy, but the market for personal care products is still encountering a modest augmentation. By analyzing all the above-given factors, it is recommended that the Hindustan Unilever Limited stocks be sold.

Ralph Lauren Corporation

Buy: do not G.I.V.E; buy

  • Stable dollar
  • Likelihood of an established and stronger economy
  • Profitably analysis shows substantial gains

The United States economy was facing rapid inflation, and different issues regarding jobs and consumer prices were depicted in previous years. However, the recent progress was made through a minutes meeting of the Federal Open Market Committee, which took place in late January 2018 and affirmed the elevated expectations of increased rates in the coming months. At the same time, the stability of US dollar was estimated by a famous dollar measurement that conducted by ICE, the United States dollar index boosted up and increased up to 0.4%. All underlying factors suggest that the financial markets and economy of the United States indicate a steady and more secure economy as compared to the economic condition encountered at the end of the year 2017. The officials addressed this development as “further gradual increases.”

Along with the economy of the United States, the profitability analyses for Ralph Lauren portray a stable and robust condition that is, of course, an outcome of a flourishing and productive market environment. Ralph Lauren updates show a net profit margin of 1.3%; meanwhile, its operating profit margins and gross profit margins are 2.3 and 58%, respectively. RL’s beta factor is estimated at 0.58. Based on the improving market and economy and the substantially steady status of the US dollar, it is recommended that investors not be involved in the selling of Ralph Lauren’s stock and adhere a bit if they have already invested with RL. Moreover, it is the right time to make an investing decision and buy shares of Ralph Lauren because analysts are anticipating low and high revenue for the business, which is 1.28 billion and 1.37 billion dollars in that order.

References

Cenedese G. What’s the relationship between stock returns and exchange rates? World Economic
Forum. https://www.weforum.org/agenda/2015/07/whats-the-relationship-between-stock-
returns-and-exchange-rates/. Accessed February 21, 2018.

Rupee to be volatile, current account deficit to be above 2% in FY18: Teresa John, Nirmal Bang. The
Economic Times. https://economictimes.indiatimes.com/markets/expert-view/rupee-to-be-
volatile-current-account-deficit-to-be-above-2-in-fy18-teresa-john-nirmal-
bang/articleshow/63012902.cms. Published February 21, 2018. Accessed February 21, 2018.

Hindustan Unilever to pay Rs 119 crore as GST dues. The Economic Times.
https://economictimes.indiatimes.com/industry/cons-products/durables/hindustan-unilever-
agrees-to-pay-penalty-for-not-passing-on-gst-rate-cuts-to-customers/articleshow/62834025.cms.
Published February 8, 2018. Accessed February 21, 2018.

Hindustan Unilever Ltd. English. http://www.moneycontrol.com/india/stockpricequote/personal-
care/hindustanunilever/HU. Published February 2018. Accessed February 21, 2018.

Ralph Lauren Corp. Cl A. MarketWatch.
https://www.marketwatch.com/investing/stock/rl/analystestimates. Accessed February 21, 2018.

Ralph Lauren Corporation (RL) Recommendations. NASDAQ.com.
https://www.nasdaq.com/symbol/rl/recommendations. Accessed February 21, 2018.

Jackson D. Recommendation Trends For Investors: Ralph Lauren Corporation (RL), Dte Energy Company
(Dte).
Standard Oracle. https://standardoracle.com/2018/01/17/recommendation-trends-for-
investors-ralph-lauren-corporation-rl-dte-energy-company-dte/. Published January 17, 2018.
Accessed February 21, 2018.

Stock-market rally vaporizes as 10-year yield climbs.
https://www.marketwatch.com/story/stock-market-rally-vaporizes-as-10-year-yield-climbs-to-
295-dollar-strengthens-2018-02-21?link=MW_popular.Published February 21, 2018. Accessed
February 21, 2018.

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