FX MORNING UPDATE
USDINR opened at 71.20 on Friday and the pair traded in the 70.67-71.20 range. Spot USDINR closed at 70.94 y’day, loss of 38 ps for USD as against prior close of 71.32. RBI reference rate was fixed at 71.31 on Wednesday. Sep USD/INR closed at 71.02, loss of 37 ps for USD as compared to prior day’s close of 71.39. Sep Euro/INR closed at 78.42, GBP/INR at 88.83 and Yen/INR at 65.81.
Rupee gained to 70.67 after FM’S announcement of Corporate tax cut. However, Rupee stabilised and even weakened partially on fears of expanding fiscal deficit.
FII’S have nett sold Rs 6152 Cr of Indian Equities in Sep . FII’S have nett bought Rs 43221 Cr of Indian Equities in this calendar Year till date. FII’S have nett bought Rs 792 Cr of Indian debt securities in Sep. FII’S have nett bought Rs 29394 Cr of Indian debt in this calendar year till date.
Benchmark Nifty climbed 5.32% on Friday. DOW declined 159 points(0.59%) on Friday. Nikkei climbed 0.16% and Hang seng declined 0.13% on Friday.
Euro closed the week at 1.1017 ,Pound at 1.2479,Yen at 107.57.
Commodities: Gold is now at USD 1517 and WT1Crude at USD 58.40./Brent at USD 64.65.
Interest rates: USD 10 Yr yield is at 1.75% and 3 m libor closed at 2.10%. Indian 10 yr benchmark yield closed at 6.79%.
Economic news: FM announced steep cut in Corporate tax to 22%. Corporates can chose to pay 22% without any expemption or 25.17% . MAT has been cut to 15% from 18%. New manufacturing companies registered after Oct 1, 2019 will pay only 15% tax. This is the lowest in South East Asia.
Govt hopes that this will lure companies to invest in India and make India as a manufacturing base. CSR scope has been extended to include contribution to IIT’S and other Govt funded research institutions.
Indian Equity markets soared and registered the second major single day gain in 10 Years. Corporate after tax earnings are bound to increase 15%.
GST council reduced GST rate for hotel rates above Rs 7500 to 18%. There was no GST concession for auto sector.
Data highlights : – No major data release on Friday
Monday’s calendar: – EU PMI(mfrg) and PMI(services)- final
Daily Support/Resistance table
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
Technicals: Spot closed above 50 and 200 day moving averages. 20 day moving average is at 71.61. 50 day moving average is at 70.45.200 day moving average is at 70.18. Daily MACD is in sell zone, implying top at 72.40. Important support is at 70.85/70.35 and next important resistance is at 72. Spot closed below its average level of the day.
Intra day supports and resistances for Aug contract are:
PP: 71,S1:70.71, S2:70.41, R1:71.30, R2:71.59
Hedging strategy for USD/INR: Hedging decisions be taken according to comfort and accounting rates.
CROSS CURRENCY TECHNICALS:
EURO/USD: The pair is below major moving averages. Next Major resistance is at 1.1250 Major support is at 1.0840. Daily MACD is in buy zone, implying an important bottom at 1.0925. Weekly MACD is in sell zone, implying important top at 1.1415.
GBP/USD: The pair is bullish and is trading above 50 day major moving average, but still below 200 day moving average.Daily MACD is in buy zone, implying important bottom at 1.20 and weekly MACD is in buy zone, implying important bottom at 1.20. Important resistance is at 1.2565/1.2645. Important support is at 1.2320/1.2280.
USD/YEN: The pair is between major moving averages. Daily MACD is in buy zone, implying important bottom at 104.45. Next important resistance is at 109.30. Important support is at 107.