Group : 5 Sector: Automobile Date: 15/07/2011

News: Link:

Rupee closes at over 3-month high against dollar [link]

Repercussions for the Automobile industry: The strengthening of rupee vis a vis the dollar is likely to hurt export of automobiles as Indian automobiles will be costlier. News: Link: RBI raises interest rates by 50 basis points. [link]

Repercussions for the Automobile industry: Raising of interest rates by RBI is likely to impact the interest rates in a way that they move upwards. As such , borrowing will become costly and it is likely to put pressure on the margins of the automobile manufacturers. It is likely that such a move will impact the automobile industry adversely. Automobile stocks are likely to move down. News: Link: Moody s Downgrade Warning Adds Pressure on U.S. Debt Deal [link]

Repercussions for the Automobile industry: In case the US move towards raising the debt limit from the current level of $14.3 million it is likely to do so without any credible plans for debt reduction. This is likely to push interest rates further up. This will in effect result in higher borrowing cost for the automobile sector. Thus it is likely Indian automobile manufacturers with exposure in the US bond market will likely face it difficult to borrow. This is likely to impact their earnings negatively and stock prices are likely to plummet. News: Link: Ford Said to Plan Construction of Second 5,000-Employee Car Plant in India [link]

Repercussions for the Automobile industry: The move by Ford is likely to increase competition for the existing automobile players. Thus prices are likely to drop and margins are likely to be strained. This will result in a decline in the profits for the existing players. Thus their stock prices are likely to be adversely affected by Ford s decision to enter the market