USDINR opened at 79.49 y’day and the pair traded in the 79.49-79.66 range. Spot USDINR closed at 79.60, gain of 16 ps for USD as against prior close of 79.44. RBI reference rate was fixed at 79.64 on 12/07. July USD/INR closed at 79.59, gain of 18 ps for USD as compared to prior day’s close of 79.41. June Euro/INR closed at 80.23, GBP/INR at 94.60 and Yen/INR at 58.38. USDINR fwd premia was trading at around 2.98% p.a.  FX reserves stands at USD 588 bn as on July 1 st.

In 2022-23 fiscal, FII’S have sold 98014 Cr of Equities till June end and have sold Rs 8486 Cr of debt till date. In 2021-22, FII’S net sold Rs 128897 cr in Equity segment and have net bought Rs 4805 cr of 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 declined 157 points (0.97%) y’day. DOW declined 192 points (0.62%). Nikkei declined 1.77% and Hang Seng declined 1.32%.

Euro closed at 1.0030, Pound at 1.1886, Yen at 137.13.

Commodities: Gold is now at USD 1725 and WT1Crude at USD 96/Brent at USD 100.

Interest rates: USD 10 Yr yield is at 2.97% and 3 m libor closed at 2.39%. Indian 10 yr benchmark yield closed at 7.44%.

Economic news: Indian CPI for June climbed 7.01%. Average Apr-June inflation is at 7.3%.Food inflation rose 1% m/m. RBI is mandated to maintain inflation rate in the 2 to 6% band. This is the second consecutive Quarter that CPI is above 6%. If July-Sept Quarter CPI averages more than 6%, RBI has to explain its failure to Govt. RBI’S next meeting is on Aug 2 nd to 4 th.

IIP surged 19.6% y/y in May as against 7.1% in April. Manufacturing climbed 20.6%, mining climbed 19.6% and Electricity sector grew by 23.5%. Consumer durables sector grew by 58.5%.

RBI announced Rupee settlement for International trade. This could allow Govt to permit Russian banks to open Rupee accounts in India, which can be used for import payments. This move could save USD 30 to USD 36 bn in FX demand and help Rupee.

Data highlights: – EU and German Zew surveys declined steeply to -51.1 and -53.8 respectively.

Wednesday’s calendar :  US CPI

-EU industrial production

-UK Industrial and manufacturing production and GDP

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 78.72. 50 day moving average is at 77.96.200 day moving average is at 75.78. Daily MACD is in buy zone. Important supports are at 79.35/79.10/78.85 and important resistance is at 79.75. Spot closed above its average level of the day.

Intraday supports and resistances for July contract are:

PP: 79.67, S1:79.57, S2:79.49, R1:79.75, R2:79.85.             

Hedging strategy: Hedging decisions be taken according to comfort and accounting rates.

However on directional basis, suggest the following:

USDINR Exports can be partially hedged at 79.35+ levels. Nearby imports can be hedged at 78.85/78.45.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.0350/1.05. Next major support is at 1.0030. Daily MACD is in sell zone, implying an important top at 1.0625. Weekly MACD is in sell zone, implying important top at 1.1498.

GBP/USD: The pair is below 50 and 200 day moving averages. Daily MACD is in sell zone, implying important top at 1.2410 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.1850. Important resistance is at 1.2160/1.24.

USD/YEN: The pair is above major moving averages. Daily MACD is in sell zone, implying important top at 137. Important support is at 134.35/131.35. Major resistance is at 137.

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