BL Research Bureau

The rupee (INR) remained sluggish yesterday and closed slightly lower at 74.85 versus the previous close of 74.79. Yet, it remains within the price range between 74.7 and 74.9.

But today, the local currency has opened higher at 74.74. It has an immediate resistance at 74.7, a breakout of which can attract considerable buying interests and might take the rupee to 74.5 and 74.35. On the other hand, if INR falls because of the resistance at 74.7, it can retest 74.9. Below that level is the critical support of 75.

The foreign investors’ activity is much lower compared to last week in terms of volume. And, the Foreign Portfolio Investors (FPI), who were net buyers yesterday, remain on the other end of the spectrum when the fund flow for the whole week is considered, i.e. the net inflow on Thursday stood at ₹207 crore (equity and debt combined) but for the week per se, there is a net outflow of about ₹350 crore until Thursday.

Dollar index:

The dollar index continues to make fresh lows. After closing with a loss yesterday, the index is declining today as well. It has already made a new low of 92.59 and is now trading at 92.65. The bears look strong, and the index will probably depreciate to 92.

Trade strategy:

The rupee has begun the session on the front foot, and the dollar seems to be weak as indicated by the dollar index, setting a platform for the local currency to rally. However, 74.7 is a considerable resistance which can be challenging to break. So, for intraday, traders can buy INR with tight stop-loss if it breaches 74.7.

Supports: 74.9 and 75

Resistances: 74.7 and 74.5

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