|Currency Pairs||WEEKLY CLOSE||PRIOR WEEK CLOSE||% change|
Brent Crude closed at USD 63.20 VS prior week close of USD 62.45
Nifty closed at 11284 vs prior week close of 11419.
G-SEC Yields climbed higher. 10 Year G-SEC Yield closed at 6.52. In the last one month, 10 year yield has declined around 50 bps.
Major developments: Indian Equity markets continued to maintain declining trend. Broad indices have declined 5% from budget peak. Reversal in G-SEC yields was the significant development in the outgoing week. 10 Year yields climbed above 6.5% after touching 6.35%. This could be attributed to PMO ordering a review of overseas bond issuance. FM had announced in Budget that Govt will tap overseas markets for part Govt borrowing programme.
USDINR traded in a tight range between 68.89 and 69.12. USD struggled to clear 69.10 despite broad USD gains against major currencies like Euro and GBP.
FII’s continued to pull money from Indian Equities. They were nett sellers of Rs 13000 Cr plus in July alone.
FII’S have nett sold Rs 13813 Cr of Indian Equities in July . FII’S have nett bought Rs 65000 Cr of Indian Equities in this calendar Year till date. FII’S have nett bought Rs 8758 Cr of Indian debt securities in July. FII’S have nett bought Rs 19124 Cr of Indian debt in this calendar year till date.
GST rates on EV vechiles and chargers reduced to 5%.
RBI policy in first week of August is the major event for Indian markets.
-US Fed is holding its meeting on July 30th/31st. Markets have priced 25 bps cut.
– US GDP grew 2.1% annualized in Q2, better than expectation of 1.8%. GDP price index rose 2.4% qoq, below expectation of 4.0% qoq.
-US-China are set to resume their trade talks in Shanghai.
-Pound is pressured as UK may leave EU without any deal on Oct end, leaving a big gap in its finances.
-ECB left rates unchanged and did not give clear guidance on its next move. However, markets senses a new QE programme and 10 bps deposit rate cut in Sept meeting. Euro is trading weak against USD.
-EU manufacturing data contracted further, solidifying the case for extension of easier monetary policy.
-Oil prices remained steady last week.
Important developments in coming week: US Fed meeting. US spending and employment data.
Currency range forecast for coming week:
USDINR: 68.55-69.10, EURINR: 76.25-77.25, GBPINR: 84.50-86.50, JPYINR: 63-64.25
Suggestion: Cover 1 month import payables on dips to 68.60. USD exports may remain hedged. EURINR receivables can be hedged on spike to 77.25+ levels. Payables can be covered closer to 76.50. GBPINR receivables can be covered on rally to 86.50.