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Daily Snapshot

* The rupee continued to appreciate on the back of positive domestic equities and no major rise in oil prices

* The dollar on Tuesday posted moderate gains. A larger-than-expected increase in US June consumer prices pushed T-note yields higher and supported gains in the dollar. Also, weakness in US stock indices on Tuesday spurred some liquidity demand for the dollar. EUR/US$ fell moderately on dollar strength.

* The Nifty opened higher and gained further strength as the day progressed. Looking at options data, 15700 Put option witnessed meaningful OI addition, which should act as immediate support. On the other hand, 16000 Call option holds significant OI, which should act as resistance

* The Bank Nifty continued to outperform the Nifty as it closed with a gain of more than 1.27%. Private banks helped the Bank Nifty as they ended with healthy gains.

* Foreign institutional investors (FII) turned net sellers to the tune of | 1002 crore on July 11. They sold worth | 491 crore in the equity market and worth | 511 crore in the debt market

Rupee Outlook and Strategy

* The US$INR pair is struggling at higher levels. Due to no major move in the Dollar index and strong domestic equities, we feel a move towards 74.4 is expected

* The dollar-rupee July contract on the NSE was at | 74.61 in the last session. The open interest fell 6% for the July series

US$INR Strategy

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