Rupee Gains For 3rd Session, Settles Higher To 74.40 Against Dollar

The rupee erased its early losses and rose for the third session, gaining six paise against the US dollar on Friday, July 23, to settle at 74.40 tracking weak crude oil prices and positive domestic equities. At the interbank foreign exchange market, the local unit witnessed heavy volatility, opening weak at 74.55 against the dollar. The domestic unit touched a low of 74.58 in the morning trade, recovering later to register an intra day high of 74.37 against the American currency. In an early trade session, the local unit declined nine paise to 74.55 against the greenback.

The rupee closed at 74.40 against the dollar, registering a rise of six paise over its previous close. On Thursday, July 22, the domestic currency had settled at 74.46 against the dollar. In the overseas market, a stronger dollar weighed on the local unit's sentiment today. On a weekly basis, the local unit strengthened by 17 paise against the greenback. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six peers, advanced 0.10 per cent to 92.91.

What analysts say:

 Mr. Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services:

“The event risk to fx market is next week's FOMC policy. So the USDINR spot will remain a little directionless until then as with the rising covid cases in the US, the Fed may communicate a dovish stance. However, any hawkish commentary or hints at tapering the asset purchase program will surge the USDINR spot above 75 zone. Thus, for next week, we expect the trend to be sideways in between 74-75.25.“

 
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities:

• After two weeks of low volatility, USDINR saw some decent two-way moves. Prices oscillated between 74.35 and 75.10 levels. However, the month-old range between 74.20 to 75.10 remains intact. The reason being RBI remains a major buyer of US Dollars at lower levels and corporate $ flows and FDI inflows are capping the upside. The end result is a range of one per cent
• Next week prices may continue in the current range as long as RBI remains a major buyer of US Dollars. The US central bank meeting on Wednesday is not expected to deliver any new information and hence would keep USDINR within 74.20 and 75.00 range. IPO-related FPI flows may pick up over the next week.
   

Mr Amit Pabari, MD, CR Forex:

''As the risk appetite has improved over the last two days, the global equity market could remain well supported; although the spread of the Delta variant and its implication could remain a headwind for those markets where vaccination drive is running on a slower note.

RBI seems to add more fuel into their reserves for future use; that is they are buying on every dip around 74.30-40 zone.

The importer-RBI pair could favor buying on every dip whenever inflows hit the market and the rupee appreciates towards 74.30 levels. On the higher side exporters are making a roof of 74.90-75.00 levels by selling forwards. In nutshell, 74.30 to 75.00 would be a short-term range for the USDINR pair.''

Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:

''Due to a strong drop in global markets and a severe drop in US yields, the USD/INR hit a high of 74.95 in the previous session. The currency pair was on the verge of breaking through the 75.00 resistance level when the RBI intervened to sell dollars in large quantities, causing the dollar to fall to 74.61 on Tuesday.

RBI may be inclined to keep a weaker rupee just above the 74.30 level to maintain a competitive exchange rate and support export growth, as demand in overseas markets is picking up in the backdrop of good export growth recorded in the last two months. 

On the domestic front, USD/INR July opened on a negative note, below the support zone of 74.64-74.62, and even breached the major support level of 74.55-74.53, due to which we witnessed a sharp fall in the prices till the first half of the session.''

Domestic Equity Markets Today:

On the domestic equity market front, the BSE Sensex ended 138.59 points or 0.26 per cent higher at 52,975.80, while the broader NSE Nifty climbed 32 points or 0.2 per cent to 15,856.05. 

Shares of Zomato almost doubled in value in debut, in the first stock market listing of a startup valued at more than $1 billion. Zomato shares surged more than 80 per cent to hit high of ₹ 138.90.

Dr. Joseph Thomas, Head of Research, Emkay Wealth Management:

“The markets today witnessed a bumper listing of one of the most awaited IPOs in recent history, Zomato. The exuberance though was not broad based, the market breadth remained negative for the day. The weekly trend too remained marginally negative as all the major market cap based broader indices closed marginally in the negative for the week. The strong show of IT stocks continued whereas slippages in reported asset quality and expectations of rising NPA risks dragged down the banking stocks.''
 

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:

“This week has been a roller-coaster type for the market. The market went below the lower boundary, which was at 15600/52100, but as retail and domestic investors who were following buy on dip strategy, entered into the market that has stuck day traders on the wrong side.

During the week, cyclical sectors remained weak whereas defensives especially, Technology and FMCG sectors attracted rotational activity.  On a weekly basis, the market has formed a reversal formation after hitting the support of 15600/52100, however on a daily basis, the market got arrested at the upward boundary which was at 15900/53100.

In the coming week, 15700/52500 would be trend decider and below that we would see the market hitting 15660/52350 and 15580/52000 levels.''

According to exchange data, the foreign institutional investors were net sellers in the capital market on July 22 as they offloaded shares worth Rs 247.59 crore. Global oil benchmark Brent crude futures fell 0.05 per cent to $ 73.75 per barrel.