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Foreign Fund Outflows Weighing on Rupee - HDFC Securities 

• Indian rupee depreciated against US dollar amid risk-off sentiments and foreign fund outflows. The surge in crude oil prices along with other commodities also weighed on local unit. Spot USDINR is expected to show long unwinding in today’s trade as global equities recovers after sell-off in last couple of days. The pair is having support at 76 and resistance at 76.50.

• Stocks in Asia look set for a steady start with investors weighing the prospect for faster Federal Reserve policy tightening, and the impact on global growth and inflation from the war in Ukraine.

• Ukrainian President Volodymyr Zelenskiy said Russian forces had begun the campaign to conquer the Donbas region in Ukraine’s east.

• Federal Reserve Bank of St. Louis President James Bullard said the central bank needs to move quickly to raise interest rates to around 3.5% this year with multiple half-point hikes and that it shouldn’t rule out rate increases of 75 basis points. US 10-year Treasury yield rose to a fresh three-year high of 2.857%.

• The dollar rose and the yen weakened to the lowest in nearly 20 years versus the greenback. Additionally, a jump in energy costs highlighted inflation concerns, as U.S. natural gas prices surged to the highest intraday level in more than 13 years with WTI crude climbing to near $110 a barrel in New York. Meanwhile, global growth concerns remain an issue even as prices soar.

• Commodities are doing great right now, global stocks not so much. That divergence is marked and will persist this quarter and possibly into 2H.

• China reported its biggest decline in consumer spending and worst unemployment rate since the early months of the pandemic as Covid lockdowns put a strain on the world’s second-largest economy.

USDINR

Technical Observations:

• USDINR April futures closed above short term moving averages.

• The pair formed Gravestone Doji Candlestick pattern signaling bearishness.

• It has formed lower top lower bottom on daily but started forming higher top higher bottom on hourly chart, suggesting down swing on hourly basis.

• Relative Strength Index of 14 days period heading north and placed above 51.99.

• MACD has given positive cross over and about to cross zero line indicating positive trend.

• Options data indicating maximum pain at 76 strike and unwinding of 76 CE and addition on 76.25 PE indicating consolidation in near term.

• USDINR April futures likely to consolidate in the range of 76 to 76.35.

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