Rupee shows bullish inclination

The rupee (INR) appreciated sharply in the initial hour against the dollar (USD) yesterday, but inched down for the rest of the session. However, the domestic currency managed to end marginally higher at 74.

Following this, INR opened flattish today at 73.98. That said, the local currency is currently hovering around the key level of 74. Proper breakout of this level can lift the rupee to 73.85, and further appreciation can take it to 73.7. On other hand, if INR depreciates from here, the nearest support can be spotted at 74.2, below which 74.3 can provide cushion.

Significant foreign inflows were witnessed yesterday as the domestic market registered record highs. Foreign portfolio investors (FPI) seem to be optimistic, and it is reflective in the investment figures – the net inflow on Tuesday was recorded at ₹4,563 crore (equity and debt combined). This means, FPIs have pumped in about ₹9,300 crore in the first two sessions of this week. Strong inflows helped the rupee gain strength.

Dollar index

The dollar index declined yesterday and ended the session at 92.23 versus the previous close of 92.5. Today, it opened with a gap-down and is currently trading around 92. A breach of this level can turn the outlook bearish, and the index could depreciate to 91.75 – its nearest support. Subsequent support can be 91.5.

Trade strategy

After opening flat, the rupee is trading just above 74. Notably, this level can provide support. Also, the dollar index is trading with a bearish bias, and further decline can lift the Indian unit. Hence, traders can buy INR with tight stop-loss for intraday.

Supports: 74 and 74.3

Resistances: 73.85 and 73.7