Currency Map:

USD/INR 72.83 73.29 -0.63
EUR/INR 89.06 88.75 0.34
GBP/INR 103.53 103.05 0.46
JPY/INR 66.94 67.02 -0.11

Brent Crude closed at USD 66.70 VS prior week close of USD 68.80. Gold closed at USD 1881.Nifty closed at 15175 vs prior week close of 14677.10 Year G-SEC Yield closed at 5.97%.

Major developments: USDINR traded in the 72.83-73.28 range and closed at 72.83as against prior week close of 73.29. Rupee gained 0.63% w/w. EURclimbed 0.34% and GBP climbed 0.46% w/w against Rupee. Indian benchmark Equity index climbed 3.2% w/w. 10 Year G-SEC Yield closed at 5.97%. In May till date, FII’S have net sold Rs 10742 cr in Equity segment and have net bought Rs 2218 cr of debt. In this financial year, FII’S have net sold Rs 952 Cr worth of Indian Equities and have bought Rs 1117 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.

Rupee gained more than expected due to strong inflows. Bond inflows and general USD weakness against majors contributed to positive Rupee sentiment. Rupee has recovered Rs 2.50 since it hit 75.33 on 22 nd April. USDINR fwdpremia again climbed higher to 5.25%. Indian Equity indices climbed 3.2%, shrugging off near term negative impact due to corona infections. Corona curve seems to have peaked in India and it is hoped that there will be a steep fall my mid-June. FII’S were not very bullish yet as evident from their net sales in Equity markets. Major rating agencies have cut Indian nominal growth due to lock downs.

On data front, Indian WPI climbed 10.49% in April as against 7.39% in March 2021. This is the highest reading in 10 years. Fuel and manufacturing inflation surged to 20.94% and 9.01% y/y.

Technically, USDINR has to clear 73.55 to negate its recent downward move.

Global developments:Focus shifted to economic data and the rising inflation curve. European zone and UK data have shown strong rebound. UK factory data is surging, while EU PMI data hit 39 month high. Strong data is also accompanied by inflation worries. This was acknowledged by Fed members. FOMC minutes indicated that QE tapering may be discussed in one of the upcoming meetings.

Focus will be on US Personal spending and income data.

Currency range forecast: USDINR:72.75(support)-73.55(Resistance), EURINR: 88.75(support), 90.75 (Resistance), GBPINR: 102(support), 103.75- Resistance, JPYINR: 66-68.50.

Suggestion: Cover USD import payables. USD receivables can be hedged on rally. EURINR payables can be hedged now. GBPINR receivables hedging can be done at around 105.

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