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Rupee To Recover On Better Than Expected Economic Data - HDFC Securities 

Indian rupee expected to bid well in opening trade following better than expected economic data and steady dollar vs. major trading currencies. The retracement in crude oil prices likely to support rupee to erase some of the loss it has in last couple of days. On Tuesday, spot USDINR closed at 75.52, after touching high of 75.67 level last since on 25 June 2020, with gain of 16 paise or 21 basis points. Technically, the pair is having resistance at 75.80 and support at 75.30.

Asian stocks look set for a steady start as traders weigh the impact of elevated inflation and await a flurry of earnings. U.S. House has passed legislation raising the debt ceiling by $480 billion, staving off a default for now.

India’s headline IIP growth continued to remain healthy at 11.9% YoY in Aug-21 vis-à-vis 11.6% in Jul-21. Going ahead, the headline growth could show single digit growth as favorable statistical base effect fades while sequential momentum is likely to be healthy due to gradual unlock by states, while other enablers like public capex, monsoon, vaccination, and policy support continue to remain in place

India’s CPI inflation moderated to a 5-month low of 4.35% in Sep-21 from 5.30% in Aug-21, extending the recent downdraft into the third consecutive month. Inflation print supports the RBI’s calibrated and gradual approach towards liquidity normalisation.

The International Monetary Fund (IMF) has retained India's GDP growth forecasts at 9.5% in 2021 and 8.5% for 2022, but trimmed the global growth outlook. The IMF cut its global growth estimate slightly to 5.9% from 6% this year. It held the forecast for 2022 at 4.9%. The fund lowered its 2021 forecast for the U.S. to 6% from 7%, mainly because of supply constraints, but boosted its 2022 estimate.

Technical Observations:

USDINR October futures formed long legged Doji candlestick pattern on daily chart indicating indecisiveness at higher level.

However, the chart formation remains bullish following higher top higher bottom formation and staying well above major moving averages.

Momentum oscillator, RSI has been hovering in overbought zone with no sign of reversal.

Trend remains firm following higher prices supported by volumes.

USDINR October futures expected to show some long unwinding or profit booking after vertical rise.

The pair is having support around 75.10 and resistance at 75.80 followed by 76.

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