Currency Map:

USD/INR 76.19 75.84 0.46
EUR/INR 85.43 85.91 -0.55
GBP/INR 94.59 95.82 -1.28
JPY/INR 71.34 70.82 0.73

Brent Crude closed at USD 41.95VS prior week close of USD 38.95.

Nifty closed at 10244 vs prior week close of 9972.

10 Year G-SEC Yield closed at 5.84%.

Major developments:USDINR traded in the 75.78-76.30 range and closed at 76.16, gain of 0.46% for USD w/w. EUR and GBP declinedagainst Rupee. Indian Equity markets climbed 2.72% w/w basis. 10 Year G-SEC Yield climbed to 5.84%.

Rupee declined and Equity indices rallied, in a week that was dominated by Indo-China border tensions. Indian Equity indices soared due to rally in heavyweight Reliance. Reliance announced that it has become debt free with investments pouring in from facebook to investment funds. Rupee weakened as USD climbed back against majors. USDINR pair was stuck in narrow ranges for most part of the truncated trading sessions, due to inability of corporates to plan their trade  schedules. There is no futher major negative news to drive Rupee lower significantly. USDINR could get locked in the 75-77 trading range for most part of this year.

FII’S have nett bought Rs 21428 Cr ofIndian Equities in June . FII’S have nett sold Rs 3123 Cr of Indian debt securities in June. In FY 19-20, FII’s have sold Rs 10200 Cr of Equities and 47393 cr of debt.

Global developments:Market is still grappling with virus concerns. Recent spate of economic data is not laced with rebound in employment. Risk on rally looks irrational considering that the virus continues its spread across US amidst concerns of a resurgence that could trigger more restrictions and cripple consumer confidence.  Financial markets are also constantly fluctuating over every vaccine/treatment update

US retail sales data was upbeat in May as consumers returned following easing of lock down restrictions and pay check under CARES act. EU and German Ifo survey also beat expectation, raising hopes of economic deceleration bottoming out sooner than expected.

BOE unanimously left the Bank rate unchanged at a record low of 0.1%. BOE increased the size of its asset purchase program by +100B pound.Members acknowledged that global economic contraction in 2Q20 will be “less severe than expected”.

Important developments in coming week:No major developments.

Currency range forecast:USDINR:75.50(support)-76.40(Resistance),EURINR:83.50(support)-86(Resistance), GBPINR: 93.50(support)-97(Resistance), JPYINR: 69.50-71.0.

Suggestion: Cover USD import payables on decline to 75.50.USD receivables can be hedged at 76.40+.1 M EURINR payables can be hedged at 83.50. EURINR receivables can be hedged closer to 86. GBPINR receivables hedging can be done on any rally to 97.

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