Rupee can trade with upward bias

BL Research Bureau

Posting a recovery, the rupee (INR) ended Tuesday’s session at 73.17 versus Monday’s close of 73.28 a dollar (USD). Thus, the local currency have moved back above the support of 73.25.

Today, it has opened higher at 73.11, inching above the resistance of 73.15. On further appreciation, the local currency can face hindrance at 73.00, a breakout of which can result in a strong rally. But if INR weakens and slips below 73.15, it can depreciate to 73.25. A breach of this level can drag it towards the support band of 73.40 and 73.50.

As has been the norm recently, the foreign inflows remained positive on Tuesday. That is, the net investments by the foreign portfolio investors (FPIs) stood at ₹257 crore (equity and debt combined). While the number is positive, given the equity market rally on Tuesday and the amount of daily inflows in recent months, it is a tad lower. While this is not an indication that the FPI will turn negative, one should have a close watch on this in the forthcoming sessions.

Dollar index

The dollar index, which ended flat on Monday after facing resistance at 91, declined on Tuesday and closed at 90.50 versus previous day’s close of 90.76. The 50-day moving average coincide at 91, making it a strong resistance. So, until the index stays below this level, it is likely to trade with a bearish bias. Currently trading at 90.40, it is likely to fall to 90.00. Below this level, it can move to 89.50.

Trade strategy

The rupee, that moved above 73.25 last session's close, has opened today’s session on a positive note and is likely to appreciate today. Supporting this, the dollar index is indicating a decline in the greenback. Considering these factors, traders can be bullish on INR and initiate fresh longs with stop-loss 73.20.

Supports: 73.15 and 73.25

Resistances: 73.00 and 72.75