We need a New Rupee for India

R Jagannathan
Firstpost.com

Since everyone, and his aunt, is offering his or her two cents worth of advice and comment on the flailing rupee, here's mine: and it's worth one-and-a-half cents, not two cents.

Literally. At 65 to the US dollar, that's what the Indian rupee is worth right now. And this should engender new kinds of thinking about the rupee that is more optimistic.

First, the numbers.

At 1.53 cents to the rupee, clearly the dollar is the wrong unit to compare the currency with. We should now benckmark against the US cent. Seen this way, the rupee is stronger than the US currency by at least 50 percent. So cheer up.

Against the British pound today, the rupee is almost at par with our former colonial masters' currency. And remember, today the rupee is quoting at a very auspicious 101 to the pound. This is a sign that the gods are with us. So what if one rupee fetches slightly less than one pence today. At 0.99 pence to the rupee, the figure is even more auspicious. Remember: 101 and .99 are both lucky numbers.

Now, the yen. At 1.51 yen to the rupee, we are clearly the stronger currency when it comes to the Japanese currency. Sorry to do this to you Shinzo Abe, but Manmohanomics is leaving Abenomics in the dust.

Next, gold. But, hey, that's not currency, you will object. Sorry, chaps, gold is money, never mind that central banks don't like competition from the yellow metal. Guess what the price of gold was in 1950, the year India became a republic? Rs 99 per 10 gm (currently Rs 31,310 per 10 gm). That's a 316-fold-depreciation against the metal. To make the comparison more logical, we should thus state gold prices in multiples of 0.1 gm. We then get a nice affordable price of Rs 313 per unit of gold (0.1 percent). Even the NREGA wage earner can now afford gold. At Rs 313 for a spec of gold dust, we can hold our heads high. This is the aam aadmi route to inclusive currency policy.

We can, of course, go on and on showing how strong the rupee really is when viewed against the right unit of foreign currency or gold. The fundamental error the markets make is to benchmark us not against the right currency, but the wrong unit of any currency or gold.

But that brings us to the rupee when measured against it own former value. Since we started with the exchange rate of one rupee equals one pound sterling in 1947 , and the pound is now worth Rs 101, the rupee's own value can thus be deduced to be around one-hundredth of what it was in 1947. We will probably get worse results that is a rupee drop in value to less than a hundredth of its purchasing power in 1947 when we deflate the rupee by adjusting it for inflation .

Put simply, today's Re 1 is worth less than 1 paisa of 1947. Perhaps this is why parliament legislated a law in 2011 to allow the RBI to mint new Rs 1,000 coins coins, not notes.

Now, for the remedies.

To make the rupee more valuable, and to economise on printing notes or coins, it is best to let the current rupee die an unsung death. At 65 to the dollar, it is anyway close to retirement age . We should issue a New Rupee which is 100 times as valuable as the existing one.

The best way to upgrade the rupee is to redenominate it by decreeing that old Rs 100 = New Rupee 1. While currency in the bank will automatically be denominated in the new rupee, the currency with the public will have to be brought to banks to exchange for new Re 1 notes.

A side-benefit: those Pakis sending us fake currency notes will be left with a lot of unbankable notes. And so will our black money holders

Strong earthquake hits northeast Japan, tsunami warning issued

Tokyo: A strong earthquake centred off the coast of northeastern Japan shook buildings as far as Tokyo and led to a tsunami warning for coastal areas of the northeast, public broadcaster NHK said on Friday.

The earthquake had a preliminary magnitude of 7.3, the US Geological Survey said. That was revised from an earlier estimate of 7.4.

A warning for a one metre tsunami was issued for the coast of Miyagi Prefecture in northeastern Japan, which was hit by a devastating earthquake and tsunami on March 11, 2011.

That quake triggered fuel-rod meltdowns at the Fukushima nuclear plant, causing radiation leakage, contamination of food and water and mass evacuations in the world's worst nuclear crisis since Chernobyl in 1986.

The government declared in December that the disaster was under control, but much of the area is still free of population.

Tokyo Electric Power Company, the operator of the Fukushima nuclear plant, reported no irregularities at its nuclear plants after the latest quake.

9 stocks that you can buy now: Expert tips

Moneycontrol Bureau

Sentiments, across the global markets, have changed.  There is a lot of optimism in the market now. The Indian market witnessed a strong rally on Tuesday. That rally is extended today.

Moneycontrol brings to you some of the recommendations given by experts that will help you cash in on the many opportunities available.

Stock picks for today:

Sudarshan Sukhani, s2analytics.com is bullish on Kotak Mahindra Bank  . "It is now on the verge of a significant breakout on the upside. It is giving excellent signs of a strong uptrend. So, it is a buy. It is not an intraday buy necessarily," he elaborates.

HDIL  has been Sukhani’s favourite. "A lot of the stocks are giving continuation patterns in an uptrend. That means HDIL rallied, it went into a sideways range and a sideways trade could go anyway. But, now, there are clear signs that the pattern, which it is developing, gives us another rally in the offering. So, we want to back HDIL today," he adds.

Sukhani has a 'buy' rating on Titan . "It rallied from Rs 210 to Rs 295. It is almost 45 percent in three months. We caught it when it moved up above Rs 230. Trends will always be discovered, once they start never at the beginning and since then Titan has been moving up. It has come in the buy list again and again as it has come today. It is making these new highs for this uptrend," he asserts.

Sukhani is also betting on Bajaj Auto  . "It is a green chart. It rallied, made a small flag like formation. A flag comes midway in an uptrend and then it resumes its rally. It resumed it on Tuesday. I think there significant upside is left," he adds.

Also read: Nifty may see 6000 in December, says Sudarshan Sukhani

Multibagger ideas:

SP Tulsian, sptulsian.com has picked up CESC  and Liberty Shoes  as his multibaggers.

CESC, Tulsian says, is a good opportunity to buy it. "I am not giving a short-term view of five-six months. But if you keep a view of about one-year, they can look to a price of Rs 360," he adds.

According to Tulsian, Liberty Shoes looks quite good. "I feel that stock can move to Rs 140 in next one year or so," he asserts.

Brokerage read:

Stock: Jet Airways 

Brokerage: Citi

Rating: Buy

Target: Rs 545

Rationale: The deal with Etihad will be skewed towards a fresh issue, which could result in fund infusion and reduce interest costs.

Stock: JP Power

Brokerage: Bank of America Merrill Lynch

Rating: Buy

Target: Rs 55

Rationale: JP Power is close to bagging the stage two forest clearance for a mine linked to its most profitable power projects. The stock could re-rate if it becomes free cash flow positive and the leverage situation improves.

Stock: Bharti Airtel 

Brokerage: Nomura

Rating: Reduce

Target: Rs 290

Rationale: While there is a real potential for higher margins post the recent spectrum auction failure, the stock doesn't look cheap after the recent run.

Stock: GSK Consumer

Brokerage: Citi

Rating: Buy

Target: Rs 3,475

Rationale: Investors should tender in the offer and hold the remaining shares not accepted, as the stock may command a delisting premium from here-on.

Sensex tops 19,000; Eicher, Videocon lead midcaps

Equity benchmarks built on their early gains, with the BSE Sensex now up close to 200 points at 19039. The December series of Nifty futures were quoting at a 40-point premium to the spot Nifty rate of 5780, indicating that traders were betting on the market to extend its rise next month.

Brokers said the upbeat mood could partly be due to reasons of sentiment rather than fundamentals.

"December is very kind to equities. Going back 32 years to 1980, December has produced a 4.6% median return with an 80% probabilitythe best for any month in the calendar," said a report by Morgan Stanley .

"Over the past 20 years, 1994, 2000, 2001 and 2011 are the only for occasions when December generated negative returns," the report said.

Realty, auto and FMCG shares are the big gainers in the first hour of trade. HDIL, Videocon and Eicher Motors were among the top gainers in the midcap space, up 4-5%.

Apollo Hospital was the biggest loser, down over 9% to Rs 792 on heavy volumes. Market talk is that CLSA has sold its 6.15% stake in the company at a discount to the market price.

Sensex gains strength as President Obama wins re-election

Indian equity benchmarks gained strength following a win of Barack Obama as 44th President of the United States of America, but the US markets seem disappointed with these results as the Dow Jones futures lost 55 points.

The 30-share BSE Sensex gained 57.30 points at 18,874.68 and the 50-share NSE Nifty rose 17 points to 5,741.15. Even the Indian rupee was up by 31 paise to 54.12 against the US dollar.

Country's largest lenders State Bank of India and ICICI Bank topped the buying list, rising 1.35 percent each while housing finance company HDFC went up 0.75 percent.

Commercial vehicle maker Tata Motors extended gains to 1 percent ahead of second quarter numbers.

Technology majors saw buying interest following US elections outcome. Infosys, TCS and Wipro were up 0.4-0.8 percent.

Among metals stocks, Tata Steel, Hindalco Industries, Sterlite Industries and Jindal Steel climbed 1 percent each.

Index heavyweight Reliance Industries and private sector lender HDFC Bank slipped 0.2 percent, limiting the upside of market. FMCG major Hindustan Unilever fell 0.7 percent.

Private power producer Tata Power remained under pressure, losing over 1 percent following weak second quarter numbers.

In the second line shares, DB Realty, Apollo Hospital, Berger Paints, 
Anant Raj Industries and J&K Bank rallied 3-6 percent while Chennai Petroleum, Tata Communications, Allcargo, Blue Circle and Era Infra Eng lost 1-3 percent.

Advancing shares outnumbered declining by a ratio of 1331 to 647 on the Bombay Stock Exchange.