The rupee snapped its two-session losing streak and rose 12 paise against the US dollar on Tuesday, October 26, to settle at 74.96, tracking positive domestic equities and easing crude oil prices. At the interbank foreign exchange market, the local unit opened at 75.05 against the dollar and registered an intra-day high of 74.95. It witnessed a low of 75.17. In an early trade session, the domestic unit inched five paise higher to 75.03 against the greenback. On Monday, October 25, the local unit declined by 18 paise to close at 75.08 against the American currency.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.01 per cent to 93.80. According to analysts, a weaker greenback against major global rivals and easing US Treasury yields also supported the local unit.
What analysts say:
Mr Amit Pabari, MD, CR Forex:
''The soaring energy prices are set to hit the economy's wallets in the months ahead. And for a net importing state like India, it remains a major cause for concern as it threatens to derail India's post-pandemic economic recovery with a widening deficit.
Domestically, the rupee has been tucked between inflows on one side and buying pressure by oil companies on the other side.... It will be watchful whether FII who have turned their back for October remigrate their flows to India again. If so, the momentum of the rupee will also largely depend on RBI's tolerance to let the rupee appreciate and how aggressive is the central bank in absorbing inflows. Overall rupee shall trade within a narrow range of 74.50-75.20 levels for the near term.''
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Limited:
''USDINR closed lower at 74.96 on spot, down 12 paise. FPI flows in upcoming IPO and corporate inflows kept USD pressured. However, the pair continues to see low volatility as global cues remain mixed. The negative impact of higher oil prices being offset by positive risk sentiments and attractive carry in rupee.
Over the past few weeks, the forward premium has hardened on decent-paying interest and suspected intervention from RBI. Higher forward premium encourages carry trade, which is a positive factor for the rupee. We expect a range of 74.75 and 75.20 on spot.''
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 383.21 points or 0.63 per cent higher at 61,350.26, while the broader NSE Nifty climbed 143 points or 0.79 per cent to close at 18,268.40.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Limited:
''Markets witnessed volatility in early trades but benchmark Nifty soon found support near 18100 and reversed sharply thereafter. The index has formed a promising reversal formation near the 20 day SMA which is broadly positive.
In addition, on intraday charts, it has formed a higher bottom formation that also supports further uptrend. We are of the view that as long as the Nifty is trading above 18200, the pullback rally is likely to continue up to 18375 and on the further upside, the index may rise up to 18450.''
According to exchange data, the foreign institutional investors were net sellers in the capital market on October 25 as they offloaded shares worth Rs 2,459.10 crore. Brent crude futures, the global oil benchmark, fell 0.40 per cent to $ 85.65 per barrel.