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Markets Back In Safety Mode on Geopolitical worries - HDFC Securities 

Indian rupee closed the February month on weak note, marked third monthly decline and closed to weakest level since June 2020. Surging crude oil price, foreign fund outflows and stronger dollar index weighed on rupee in the month gone by. Now the focus will remain on two aspects, the Russia-Ukraine War and Federal Reserves policy decision following surge in commodity prices.

Spot USDINR likely to open with loss of around half a percentage points following strength in dollar index and surge in crude oil prices on Tuesday, Indian forex markets remained closed on Tuesday on account of Mahashivratri.

On Monday, spot USDINR ended with 5 paise gain to 75.34. Technically, the set up remains bullish as long as it holds above 74.70 while on higher side 76 act as hurdle.

India’s growth recovery appears to be stalling after activity rebounded to early January levels. Indian GDP slowed in third quarter of FY22, crimped by more challenging year earlier comparison and higher input costs. GDP growth slowed to 5.4% YoY from 8.5% in previous quarter.

Risk of higher crude oil prices and risk off sentiment driven by Russia’s attack on Ukraine may impede govt. sales of public assets.

Stocks extended a global selloff Wednesday as the war in Ukraine and sanctions on Russia stoke the cost of commodities including oil and gold hurting the economic outlook and bolstering demand for sovereign bonds.

Brent crude oil touched $110 a barrel even after supply from reserves ahead of OPEC+ meeting

USDINR

Technical Observations:

USDINR March futures getting supply around 76 odd levels while short term moving average of 21 days acting as support.

The gap between short term and medium term moving averages are narrowed in last couple of days indicating consolidation.

Relative Strength Index of 14 days period placed above 50 and heading north indicating bullish momentum.

MACD has been placed above zero line and flattening indicating consolidations.

Price actions were muted while open interest and volumes are rising indicating unwinding of position ahead of holiday

USDINR March futures expected to trade in the range of 75.40 to 76.10 range.

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