Facing downward pressure, the rupee (INR) lost one-third of a per cent on Monday as it ended at 73.78 versus Friday’s close of 73.57 against the dollar (USD). However, INR ended the session above the support of 73.85, meaning it remained within the consolidation range of 73.50 and 73.85.

But today, the domestic currency opened with considerable gap-down at 73.96, slipping below the support at 73.85. Thus, bears seem to be gaining control and the rupee is likely to decline towards 74 – a key base. Breach of this level can drag the rupee to 74.25. Subsequently, it can touch 74.35. But if rupee manages to appreciate, it will face an immediate hurdle at 73.85. Resistances above this level can be seen at 73.70 and 73.50.

Big Story | What lies ahead for the rupee?

As the market fell significantly, foreign portfolio investors (FPI) turned bearish last session and, consequently, the net investment on Monday was negative. That is, net outflow of ₹323 crore (equity and debt combined) was recorded last session. Further selling can add more pressure on the currency.

Dollar index

The dollar index, after opening the session marginally lower, rallied strongly to mark an intraday high of 91.02. However, it reversed direction abruptly and ended the session at 90.04. Thus, the resistance at 91 succeeded in blocking the bulls and the late sell-off indicates an unsustainable rally. That said, the index should decisively breach the resistance at 91 in order to reverse the trend upward. Until then, the intermittent rallies should be taken with a pinch of salt.

Trade strategy

The rupee, post a gap-down opening at 73.96, looks bearish. It continues to trade below the support of 73.85 and until it stays so, bears will have an upper hand. So, traders can be bearish on INR today and go short with stop-loss at 73.80.

Supports: 74.00 and 74.25

Resistances: 73.85 and 73.70

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