FX MORNING UPDATE
USDINR opened at 74.50 Y’day and the pair traded in the 74.42-74.86 range. Spot USDINR closed at 74.80, gain of 18 ps for USD as against prior close of 74.62. RBI reference rate was fixed at 74.53 on 01/02. Feb USD/INR closed at 74.91, loss of 43 ps for USD as compared to prior day’s close of 75.34. Feb Euro/INR closed at 83.72, GBP/INR at 100.65 and Yen/INR at 64.95. USDINR fwd premia was trading at around 4.53% p.a.
|PAIRS||RBI REF RATE (01/02)|
In Jan, FII’S have net sold Rs 27506 cr in Equity segment and have net bought Rs 3615 cr of debt. In this financial year, FII’S have net sold Rs 32722 Cr worth of Indian Equities and have bought Rs 6508 Cr worth of Indian debt. In 2020-21 financial Year, FII’S nett bought Rs 2,74,203 Cr of Equities and have sold Rs 42820 Cr in debt.
Benchmark Nifty climbed 237 points (1.37%). DOW climbed 273 points (0.78%). Nikkei climbed 0.28% and Hang Seng climbed 1.07% y’day.
Euro closed at 1.1273, Pound at 1.3526, Yen at 114.70.
Commodities: Gold is now at USD 1797 and WT1Crude at USD 88.60/Brent at USD 89.50.
Interest rates: USD 10 Yr yield is at 1.795% and 3 m libor closed at 0.27%. Indian 10 yr benchmark yield closed at 6.85%.
Economic news: Union budget has given thrust to Infrastructure led growth through significant increase in capital expenditure. Capex is set to climb by 35% to Rs 7.5 lac Cr, apprx 4% of GDP. MSME’S Credit guarantee scheme has been extended with additional outlay of Rs 50000 Cr to hospitality sector. New Credit lines of 2 lac Cr has been extended to tiny and micro industries. Emphasis was also on expanding Jal Jeevan scheme to cover 3 Cr households this year and more houses under PM’S Housing scheme. Emphasis was on PM’S Gati Sakthi scheme covering highways, ports and multimodal logistics. Funds for interlinking of rivers, 100 new cargo terminals, digital banking units in 75 districts, Post offices under Core banking system, National registry for health sector, digitization of land records, use of Drones in agri sector are some of the other salient features of the budget. PLI scheme for Solar cells manufacturing, 5 G Spectrum auction, 100% Optical fibre connection in villages by 2025, extending 1 lac Cr to state Govts for projects under PM’S Gati scheme are other noteworthy features.
RBI will issue a Digital currency and all other Crypto assets income will be taxed at 30% with TDS of 1% with no provision to set off against loss. There is no new tax burden and there is no relief to salaried class in taxes. Surcharge has been made uniform at 15%.
Fiscal deficit is expected to be 6.9% for current fiscal and 6.4% in 2022-23.
Budget has oriented economy to digital and infrastructure driven growth.
Data highlights: – US ISM(mfrg), construction spending
-EU PMI(mfrg) dipped to 58.7 and UK PMI(mfrg-final) climbed to 57.3.
-EU unemployment rate was reported at 7%. German retail sales declined -5.5% m/m.
Wednesday’s calendar: – US ADP report
Daily Support/Resistance table
MAJOR SUPPORTS/RESISTANCES AND TREND TABLE
Technicals: Spot closed above 200 day major moving averages.20 day moving average is at 74.40. 50 day moving average is at 74.88.200 day moving average is at 74.10. Daily MACD is in buy zone, implying bottom at 73.80. Important resistance is at 75.05/75.35 and important support is at 74.40. Spot closed below its average level of the day.
Intraday supports and resistances for Feb contract are:
PP: 74.91, S1:75.20, S2:75.37, R1:75.20, R2:75.37.
Hedging strategy: Hedging decisions be taken according to comfort and accounting rates.
However on directional basis, suggest the following:
USDINR exports can be hedged at 75.50 +.
CROSS CURRENCY TECHNICALS:
EURO/USD: The pair is below all major moving averages. Major resistance is at 1.1485. Next major support is at 1.11.. Daily MACD is in sell zone, implying an important top at 1.1485. Weekly MACD is in sell zone, implying important top at 1.2270.
GBP/USD: The pair is above 50 ,but below 200 day moving averages. Daily MACD is in sell zone, implying important bottom at 1.3170 and weekly MACD is in sell zone, implying important top at 1.3750. Important support is at 1.3170. Important resistance is at 1.3750/1.3850.
USD/YEN: The pair is above 100 and 200 day major moving averages., but below 20 and 50 day moving averages. Daily MACD is in sell zone, implying important top at 116.35. Next important resistance is at 116.35. Important support is at 112.50
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