USDINR opened at 79.91 on Tuesday and the pair traded in the 79.45-79.92 range. Spot USDINR closed at 79.45, loss of 51 ps for USD as against prior close of 79.96. Rupee gained due to inflows related to MSCI rebalancing of Equities. 

RBI reference rate was fixed at 79.72 on 30/08. Sep USD/INR closed at 79.74, loss of 39 ps for USD as compared to prior day’s close of 80.13. Sep Euro/INR closed at 80.11, GBP/INR at 93.55 and Yen/INR at 57.90. USDINR fwd premia was trading at around 3.03% p.a.  FX reserves stands at USD 564 bn as on Aug 26 th. FX reserves declined by USD 6 bn as compared to Aug 12 th data.

In Aug till date FII’S have net bought Rs 47437 Cr of Equities in Cash segment and have sold Rs 4895 Cr of debt till date. In this Calendar Year, FII’S have sold close to Rs 1.49 lac Cr worth of Equities. 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 climbed 446 points (2.58%) on Tuesday. DOW declined 288 points (0.88%). Nikkei declined 0.37% and Hang Seng climbed 0.03%.

Euro is now at 1.0029, Pound at 1.1583, Yen at 139.47.

Commodities: Gold is now at USD 1716 and WT1Crude at USD 89/Brent at USD 95.

Interest rates: USD 10 Yr yield is at 3.21% and 3 m libor closed at 3.07%. Indian 10 yr benchmark yield closed at 7.25%.

Economic news: Indian Q1 GDP grew by 13.5% y/y as against RBI estimate of 16%. Low base effect and recovery from pandemic stuck Q1 of 21-22, were also contributors to high GDP data. The GDP had expanded by 20.1 per cent in the corresponding quarter of 2021-22. In Q4 of 21-22, GDP expanded by 4.1%. GVA at basic price at constant terms during the June quarter rose 12.7 per cent. Agriculture grew by 4.5%, mfrg grew by 4.8%, mining grew by 6.8%, construction climbed 16.8%, trade, hotels, transport, communication & services related to broadcasting climbed 25.7 per cent. Q1 Capital formation climbed 20.1%, Govt consumption climbed 1.3% , private consumption grew by 26%.

Core Sector output slowed to 4.5% in July from 9.9% year ago.

Cleveland Fed President Loretta Mester said, “my current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there; I do not anticipate the Fed cutting the fed funds rate target next year.”

Eurozone CPI accelerated further from 8.9% yoy to 9.1% yoy in August, above expectation of 9.0%. CPI core (all items excluding energy, food, alcohol, and tobacco) rose from 4.0% yoy to 4.3% yoy, above expectation of 4.0% yoy.

Data highlights: – US House price index climbed 18.6% y/y. ADP report showed that only 132k jobs were added.

-EU CPI (flash) climbed 4.3% y/y.

Thursday’s calendar : – US Weekly jobless claims, ISM(mfrg) and construction spending

-EU Unemployment rate and PMI(mfrg)

-UK PMI(mfrg-final)

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 79.56. 50 day moving average is at 79.35.200 day moving average is at 76.61. Daily MACD is in sell zone. Important supports are at 79.38/79.18 and important resistance is at 79.70. Spot closed below its average level of the day.

Intraday supports and resistances for Sep contract are:

PP: 79.89, S1:79.46, S2:79.19, R1:80.16, R2:80.59.             

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

However on directional basis, suggest the following:

USDINR imports be hedged.

CROSS CURRENCY TECHNICALS:

EURO/USD: The pair is below major moving averages. Major resistance is at 1.0370. Next major support is at 0.9935. Daily MACD is in sell zone, implying an important top at 1.0370. 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 1.2275 and weekly MACD is in sell zone, implying important top at 1.3730. Important support is at 1.1645. Important resistance is at 1.19/1.2040/1.2275.

USD/YEN: The pair is above 50 and 200 day moving averages. Daily MACD is in buy zone, implying important bottom at 130.40. Important support is at 130.40. Major resistance is at 139.40.