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

Indian rupee expected to open slightly higher from yesterday’s level as market participants believes growth driven budget announcement which will attract more flows in the country. From the bond market perspective, heavy borrowing and fiscal number weigh on bond markets but the focus will shift from union budget to monetary policy meeting scheduled on February 5. 10- year yields rose 15bps to 6.06% on Monday; most traded 5.77% 2030 yield rose 13bps to 6.08%

Union Budget: The economy seems on the mend and the nominal GDP growth of 14.4% assumed in the budget for 2021-22 looks impressive. However, some the fizz in the number comes from the extraordinarily low denominator of 2020-21 due to the 7.7% contraction in real GDP

The deficit target of 6.8%for 2021-22 (way higher than analyst forecasts) and indeed the amendment of the FRBM act so that the deficit finally comes below 4.5 per cent only in 2025-26 is perhaps as bold as expansionary fiscal policy can get

February month started on negative note for rupee as it fell 7 paise to 73.03 a dollar. However, the momentum remains on bullish side following continuation of foreign fund inflows in domestic market. The lower level buying from the central banks restricting the gains while consolidation dollar index around 91 keeping the rupee in tight range.

Technically, spot USDINR is having support at 72.70 and resistance at 73.50.

The dollar outperformed all its Group-of-10 currency peers, bolstered by continued weakness in the euro amid continued concern about how potential delays in the pace of coronavirus vaccinations could impact economic growth. The greenback touched the highest level since midNovember against the yen, while the Treasury yield curve steepened marginally as longer-term securities led underperformance.

USDINR

USDINR February futures stuck in the range of 73.05 to 73.40.

The pair is still marking bearish formation of lower top lower bottom on hourly chart while momentum oscillators rebound from oversold zone.

Momentum indicators on daily chart continued downward trend suggesting weakness in the pair.

The trend remains sideway to bearish until the range breakout happens.

Swing traders should utilise the range of 73.40 to 73 while medium term traders should wait for the range breakout.

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