IGI Logo

Rating Outlook Change Likely To Attract More Inflows - HDFC Securities 

Indian rupee expected to open slightly positive after global rating agency Moody’s revises credit rating outlook to stable which could attract more foreign fund inflows. However, worries remain from rising crude oil and dollar index that may add pressure on rupee.

Asian stocks look set to track a rebound in U.S. equities as traders assess the resilience of the economic recovery to elevated inflation fanned by surging energy costs. The 10-year Treasury yield spiked above 1.50%, oil extended its rally from a seven-year high to $83 barrel.

Global rating agency Moody's Investors Service has revised the outlook on India's sovereign rating to 'stable' from 'negative', citing receding risks to the economy, particularly from weakness in the financial sector. The rating remains unchanged at the lowest investment grade of Baa3. Moody's sees India's real GDP surpassing 2019 levels this fiscal year, with growth expected at 9.3% this fiscal and at 7.9% next year.

On Tuesday, India’s rupee and bonds declined as crude oil prices extended gains from a 7- year high, posing a risk to the nation’s trade deficit and inflation outlook. Spot USDINR rose 0.2% to 74.4487 on Tuesday after climbing to 74.6387 intraday, the highest since July 20. The benchmark 10-year yields up 1bp to 6.26%, the highest since April 2020.

India Services PMI stood at 55.2 in September compared with 56.7 in August, according to a IHS Markit statement. Even as it retreated from the 18-month high in August, the latest reading remained well above its long-run average.

A gauge of the dollar’s strength snapped a three-session losing streak as investors eyed the threat of persistently high inflation and the Federal Reserve’s path ahead. Treasuries extended declines, while a rally in commodity prices pushed oil-linked currencies higher.

Technical Observations

USDINR October futures formed Doji Candlestick pattern at resistance line indicating indecisiveness.

The pair retraced from the downward slopping trend, placed around 74.85.

It has been trading well above short and medium term moving averages.

Momentum oscillators and indicators on daily and weekly chart heading north indicating positivity for the pair.

USDINR October futures has resistance at 74.85 and support at 74.30.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.hdfcsec.com/article/disclaimer-1795

SEBI Registration number is INZ000171337

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer