IGI Logo

Rupee Likely To Open Lower On Risk-off Moods - HDFC Securities

Indian rupee expected to consolidate ahead of inflation and industrial output data. India’s consumer prices for January are expected to have risen 4.4%, according to the median estimate in a Bloomberg survey before data to be published Friday. That would be the second month within the RBI’s range after December’s 4.59% increase. The focus will be on bond markets which reflects the rate market.

Sovereign Indian bonds advance as the central bank sold bonds at lower-than-expected cutoff yields. Speculation that the RBI bought bonds in the secondary market also boosted demand. The 10-year yield fell by 5bps to 5.96% on Thursday after declining by 7bps on Wednesday; the yield on the most traded 5.77% 2030 debt declined by 2bps to 6.02%.

On Thursday, we have seen spike in volatility which are at multiyear low of 4% but USDINR spot closed with a paise gain to 72.86 after falling to low of September. the Reserve Bank of India once again intervened to cap the rupee’s rise. The central bank’s intervention did not allow the rupee to strengthen above the closely watched level of 72.70-72.75 in the face of dollar sales by foreign banks and exporters. The bias for pair remains bearish and fall below 72.75 will lead to 72.40 while on higher side 73.20 act as resistance.

The dollar headed for the longest run of losses, fifth straight day fall, since mid-November as applications for U.S. state unemployment insurance fell slightly last week and claims for federal benefits swelled. The dollar index was little changed at 90.48 in holiday-thinned trade due to Chinese new year, on track to fall 0.5% in a week that took it to the lowest since Jan. 27 at 90.249. The euro gains for the fourth day in five though faces strong resistance at 1.2150.

USDINR

USDINR February futures formed “Dragonfly doji” candlestick pattern suggesting indecisiveness among traders. While formation is case for reversal one should remain cautious at current level.

The pair is having resistance at 73.23 and support at 72.70.

Momentum oscillator, Relative strength index is heading south suggesting down ward momentum.

We expect short covering bounce only above 73 odd level while on down side one should expect 72.70 and the 72.50

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