Slight depreciation in rupee may not spell disaster for markets: Pramod Gubbi

In a chat with ET Now, Pramod Gubbi, VP, Institutional Equity, Ambit Capital, shares his view on the likely impact of rupee depreciation on domestic equities.

ET Now: Can the ongoing currency weakness turn out to be an irritant? While it is bound to aid IT and other export-oriented sectors, but largely per se the rupee weakness is not a good news for the market.

Pramod Gubbi: Yes indeed. To the extent that it takes away foreign investors’ expected returns from the market. It might also make imports much more expensive. That said, we have got a huge tailwind in terms of commodity prices which form the bulk of our imports. Therefore, that may not be much of hindrance. Overall, it may help a little bit particularly if the focus on ‘Make in India’. If we were to get anywhere in terms of manufacturing exports, a little bit of devaluation may not be that bad. In any case, given the stability of the rupee over the last two years since 2013 summer has been much better than most of the currencies, there is an element of catch up that the rupee has to do. Therefore, a bit of depreciation may not be catastrophical for the Indian market.