The rupee (INR) closed slightly below the support of 75 on Thursday. However, the break down does not appear decisive and the local currency has a good chance to recover. Today, it has opened marginally higher at 74.96 versus Thursday’s close of 75.03. If INR can build on a positive momentum on the back of the gap-up open, it can appreciate to 74.8 and 74.7 whereas if it slips below 75, the bears might gain traction dragging the local currency to 75.1 and 75.3.

As the market looked broadly downward biased yesterday, the Foreign Portfolio Investors (FPI) were net sellers reflecting Thursday’s market sentiment. The net outflow stood at ₹268 crore (equity and debt combined). Nevertheless, for the whole week, the FPIs are positive and the net inflow till Thursday stands at nearly ₹1,700 crore.

Dollar index

The dollar index declined after facing the resistance of 21-day moving average at 93.2 and ended the session on a negative note. Currently trading at 92.64, the price action hint at more depreciation and the index could retest its prior low of 92.13. The immediate support below that level is at 92. A break below that level can result in sharp decline, which is a favourable scenario for the Indian currency.

Trade strategy

Though the rupee closed at 75.03 on Thursday, it opened with a gap-up today moving above the support of 75. The domestic unit looks set to gain today on the back of the support at current level. So, traders can initiate intraday rupee longs with stop-loss at 75.1.

Supports: 74.9 and 75

Resistances: 74.8 and 74.7

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