Pandemic causes historic contraction in Indian GDP - HDFC Securities
* Rupee expected to open with minor losses amid weaker than expected economic data. However, the momentum remains on up side following weakness in the dollar index and stronger Asian currencies.
* On Monday, Indian rupee erased the early morning gains and ended with the loss of 22 paise to 73.63 a dollar. The tension at Indo-China border weighed on Indian rupee and domestic equity market.
* India’s economy posted the biggest contraction among major economies last quarter, with a recent surge in coronavirus infections weighing on the outlook for any recovery. Gross domestic product shrank 23.9% in the three months to June from a year earlier, the sharpest decline since the nation started publishing quarterly figures in 1996, and was worse than any of the world’s biggest economies . The median estimate in a survey of economists was for an 18% contraction.
* India’s budget deficit breached the annual target four months into the fiscal year, as expenses far exceeded revenue collection in the face of the coronavirus pandemic. The fiscal deficit during April-July was 8.21 trillion rupees ($111.5 billion).
* Emerging-market currencies edged fractionally higher, their seventh day of gains and their longest winning streak this year, on bets the dollar will continue to weaken. The Chinese Yuan was among the best performing currencies as China’s economic activity rebounded and oil prices rose.
* USDINR September Futures formed Doji candle stick pattern suggesting indecisiveness among traders.
* It has been trading well below short term moving averages.
* Momentum Oscillator, RSI of 14 days period entered in the oversold zone but still placed well below average line.
* Monday’s high low will play the crucial low for the short term trade. One should eyes on level of 73.90 and 73.20 range breakout for trading opportunities.
* Overall bias remains bearish until it crosses 74.50 level.
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