Technical Analysis

Daily Rupee call: INR bearish below 75.7

Akhil Nallamuthu | Updated on April 07, 2020 Published on April 07, 2020

BL Research Bureau

The rupee (INR) opened today at 75.94 against the dollar (USD). The local currency has opened above 76, and if it can sustain above that level, it can rise to 75.7 and 75.4, which are the key resistance levels. But if the rupee faces selling pressure and gives up the gain, 76.3 and 76.5 can act as support levels.

After dumping assets (equities and debt combined) worth ₹1.2 lakh crore during March, the Foreign Portfolio Investments (FPI) looks to be in no mood to buy. According to the data by National Securities Depository Limited (NSDL) the FPI outflow for the current month is already ₹6,750 crore. The rupee can be under persistent downward pressure if the FPIs continue to sell.

Foreign reserves:

The weekly statistical supplement released by the Reserve Bank of India (RBI) last Friday showed that the external reserves increased between March 20 and 27. As per the report, the reserves have increased by $5.7 billion i.e. the total reserves rose to $475.6 billion from $469.9 billion. Foreign Currency Assets (FCA), the largest component of the reserves went up by around $2.6 billion to $439.7 billion from $437.1 in the same period. The value of gold holdings increased by a significant $3 billion to $30.9 billion compared to previous week’s $27.9 billion.

Dollar index:

The dollar index has moved above the critical level of 100, but it is facing a resistance at 101. The index, after rallying to 100.93, has moderated to 100.5 today. The rally seems to lose strength, and the index is likely to decline to 100, which is important support. A break below that level can further drag the index, which can be positive for the Indian currency.

Trade strategy:

The rupee can be bearish until it trades below the key level of 75.7. Until the domestic unit decisively breaks out of that level, it could face selling pressure on rallies, and so one can remain bearish on the rupee.

The rupee is currently trading at 75.86. Considering the risk-reward, rather than initiating fresh positions at current levels, traders can either short rupee with tight stop-loss if it rallies to 75.7 or short rupee with tight stop-loss if it slips below 76.

Supports: 76.3 and 76.5

Resistances: 75.7 and 75.4

Published on April 07, 2020

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