After a week of weakness, Rupee managed to score a strong comeback against the US Dollar. The local unit strengthened from an intra week low of 61:20:25 levels towards 60:40 levels on spot. A sharp 80 paise gain was triggered by selling from exporters and a couple of banks converting foreign currency into Rupees on behalf of a couple of large domestic companies.
Speculators in the domestic market had to reverse their small sized long bets as prices failed to hold above the 61 level. Offshore market is not showing Much enthusiasm yet, evidenced from the non existent premium on Rupee.
Last week was a holiday shortened week due to poll dates in Mumbai. No major economic news was scheduled from the domestic market. Global markets have been on a choppy range off late. Economic data has been mixed, with European data showing strength but negated by weakness in Japanese, Chinese and US macro releases. Geo political situation remains uncertain as Tensions between Ukraine and Russia continues to mount.
Over this week, we expect a more ranged market as traders await the conclusion of national Polls and its outcome. Global markets are showing signs of bull fatigue and as a result domestic Equity markets are seeing down ward correction. Inflows in debt and equity has become shallow. As a result, a range of 60:20/40 and 61:20/40 can be seen on spot.
By Anindya Banerjee, analyst, Kotak Securities
