Daily Rupee call: INR faces major hurdle

The rupee (INR) gained about half a per cent in last session following a sharp rally in the second half of last session as it ended the session at 73.52 versus 73.9 – its Monday’s close. As a result, the local currency breached a couple of resistances i.e. 73.85 and 73.7 on Tuesday.

Today, the rupee has opened with a minor gap-down at 73.59 and it is currently trading around 73.55. Notably, it faces a substantial resistance at 73.50. If the bulls can push through this level, the rally is likely to be extended towards the subsequent resistance at 73.40. A breach of this level can take INR to 73.15. But if the Indian unit weakens, the nearest support is at 73.70. Subsequent support is at 73.85.

The foreign portfolio investors (FPI) pumped in considerable amount of money into the Indian market yesterday – in line with the recent trend. The net investments of FPIs on Wednesday stood at nearly ₹2,910 crore (equity and debt combined), taking the net inflow in the current week to about ₹6,700 crore. This has been a major catalyst for the rally and as long as this trend continues, the rupee can stay strong against the greenback.

Dollar index

The dollar index ended Tuesday’s session with a minor gain as it closed at 90.96 versus its previous close of 90.79. That said, the overall trend however remains bearish and the index is likely to face stiff resistance at 91. Hence, the dollar index is likely to resume the downtrend and a decline is positive for the Indian currency.

Trade strategy

The rupee after opening with a gap-down today is hovering at 73.55. While the trend is bullish for the local currency, it faces a significant resistance at 73.50. Hence, traders can stay on the fence for now and initiate fresh rupee long if it breaks out of the resistance at 73.50.

Supports: 73.70 and 73.85

Resistances: 73.40 and 73.15