Technical Analysis

Daily rupee call: Next support at 74.25

Akhil Nallamuthu BL Research Bureau | Updated on March 12, 2020

The rupee (INR) has opened considerably lower, at 74.28 versus its previous close of 73.64 against the dollar (USD); it has now marginally gained to 74.15. If it remains below 74, it can face more selling pressure which can possibly drag the local currency to its all-time low at 74.48. Currently, the year-to-date loss against the dollar stands at about 4 per cent.

Technically, 74.25 is a considerable support. A break below that level can drag the rupee to 74.48. On the other hand, if the local currency strengthens from current level, 74 will act as a resistance, above which it can rise to 73.5.

Yesterday, with the support of 74, the domestic currency gained and ended the session at 73.64; previous close was at 74.08. But the rally does not seem to sustain; for the rupee to reverse the short-term trend bullish, it must move above 73.5.

The one-year forward spread of USDINR, which was at 395 points on Monday, dropped to 347 points, indicating an ease in pressure. But the rupee will face selling pressure until the Foreign Portfolio Investments (FPI) continue to pull out. As per the latest data by the National Securities Depository Limited (NSDL), the net outflow for the current month is at ₹21,733 crore (equity and debt combined).

Dollar index

The dollar index was marginally up on Wednesday. Compared to its prior close of 96.4, the index closed at 96.5 yesterday. While 96.5 can act as a resistance on the upside, the nearest support can be spotted at 96.

Trade strategy

Bears seem to regain traction which can result in further rupee weakness. Since 74.25 is a support, it has slightly rebounded to 74.15 now. On the other side, 74 will act as a resistance. Considering these factors, traders can short rupee for intraday if it slips below 74.25. Stop-loss can be at 73.9.

Supports: 74.25 and 74.48

Resistances: 74 and 73.5

Published on March 12, 2020

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