Technical Analysis

Daily rupee call | INR: Tread with caution

Akhil Nallamuthu | Updated on October 09, 2020 Published on October 09, 2020

In today’s announcement, the Reserve Bank of India has kept the repo rate unchanged at 4 per cent. While this can be positive given the higher inflation environment, the rupee could witness higher volatility during the day.

Extending the positive bias, the rupee (INR) gained against the dollar (USD) on Thursday as well, closing at 73.24 versus the previous close of 73.33. Following this, the domestic currency opened with a gap-up at 73.18 today. While 73.15 can be a hurdle, the local currency will mostly likely rally above that level and move towards 73. A breach of this level can take the exchange rate to 72.8. But if the rupee weakens, the support levels are at 73.3 and 73.5.

Foreign Portfolio Investors (FPI) seem to be considerably positive on the domestic market, with significant investment in domestic assets. The net investments on Thursday stood at Rs 978 crore (equity and debt combined), which has taken the net inflow for the week to just over Rs 3,400 crore. This has helped the rupee gain ground against the dollar.

Dollar index

Though the dollar index is exhibiting sluggish price action, the major trend remains bearish and it lies below the important level of 94. While the index trades below this level, bears will have an upper hand. Also, the price remains below the 21-day moving average, indicating a bearish outlook. Support levels from the current level are at 93.25 and 93.

Trade strategy

The rupee has been appreciating steadily since the beginning of the week and even today opened on the front foot. Moreover, the dollar index is trading with a bearish bias. However, the rupee can be volatile in today’s session and traders should tread with caution even if the price action is in favour of INR.

Supports: 73.15 and 73.3

Resistances: 73 and 72.8

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Published on October 09, 2020
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