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Rupee : Positive but Lethargic - HDFC Securities 

India rupee expected to start steady following calmness in the global forex markets. The one month forward USDINR is a paise higher from yesterday’s 74.49 suggesting muted start. In near term, rupee expected strengthen against the dollar as Indian companies are expected to raise about 300 billion rupees ($4 billion) through IPOs this month.

We can see RBI absorbing some of the capital inflows arising from upcoming IPO subscriptions, for smoothing the rupee appreciation. Looking at the overall situations, we expect local currencies to stay in range with appreciating bias for this month. Spot USDINR is expected to trade in the range of 73.50 to 75.

Rupee continued to rally on Tuesday, albeit in rather quiet fashion in comparison to domestic equities which closed at life high. Overseas forex markets also remained lackluster with G10 currencies trading in tight range, on thin volumes since start of the week.

Spot USDINR ended the day with loss of 6 paise to 74.29. India’s total debt jumped to 60.5% of gross domestic product to $1.6 trillion (Rs.119 trillion) for fiscal year ended March from 51.6% the year before. Of this, external debt accounted for Rs.6.8 trillion, or 3.5% of GDP. The dollar trailed most Group-of-10 currencies Tuesday as 10-year Treasury yields remained near recent lows.

The yen and franc extended gains as the gap with U.S. equivalent yields narrowed and concern grew that increasing coronavirus cases will curb global economic growth. Stocks reversed early losses and raced higher, with the S&P 500 and Nasdaq 100 each finishing near their best levels of the day to extend to 18% and 17% year-to-date gains, respectively.

USDINR

Technical Observations:

USDINR August futures dipped further towards month low on Tuesday.

The pair has been trading below short term moving averages with lower top lower bottom formation on hourly and daily chart.

Momentum oscillator, relative strength index of 14 hour periods heading south and about to enter in oversold zone suggesting continuation of weakness.

USDINR August futures expected to trade with negative bias and fall below 74.40 opens for 74.20 and 73.90 level while on higher side 74.65 remains biggest hurdle.

USDINR August Hourly Chart

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