Continuing its winning streak for the third straight session, the rupee appreciated 15 paise against the US dollar on Friday, May 28, to settle at 72.45 (provisional) tracking positive domestic equities. At the interbank foreign exchange market, the domestic unit opened at 72.46 against the dollar and registered an intra-day high of 72.31. It witnessed a low of 72.49. In an early trade session, the local unit gained 18 paise to 72.42 against the greenback. The rupee closed at 72.45 against the dollar, registering a gain of 15 paise over its previous close.
On Thursday, May 27, the local unit settled at 72.60 against the American currency. In the last three trading sessions, the domestic currency has appreciated by 51 paise. On Tuesday, May 26, the local unit rose 19 paise to close at 72.77 against the greenback.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.14 per cent to 90.09. According to forex traders, the rupee gained strength as the daily COVID-19 cases declined in the country.
“Next week is going to be very eventful for USDINR, with RBI MPC outcome and the US NFP data. RBI MPC will continue to maintain its accommodative stance but the focus will be on the outlook of the central bank over the spill-over effect of the second wave of COVID-19 on the economic growth…Technically, there has been a sharp fall in USDINR spot and we expect the new trading range to be 72-73,” said Mr. Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services
”Yesterday’s expectation was that due to month-end closing in futures there could be some buying but flows are so huge that all buying is being absorbed and USDINR is just not able to move higher. Today also is month end for OTC and the opening seems to be below 72.50 as the market gets sold off,” said Mr. Anil Kumar Bhansali, Head of Treasury – Finrex Treasury Advisors
”Equities higher and other currencies generally consolidating while EM currencies all gaining against the dollar will keep dollar rupee in a range of 72.20 to 73.00. Exporters to sell the uptics while importers to buy the near term on all dips,” he added.
On the domestic equity market front, the BSE Sensex ended 307.66 points or 0.60 per cent higher at 51,422.88, while the broader NSE Nifty advanced 97.80 points or 0.64 per cent to 15,435.65.
”The Nifty eventually touched a new high above 15431 level but the Sensex is still behind by 1000 points at 51400 and the main reason is the underperformance in HDFC and HDFC Bank. However, in the coming days we could see the rally in HDFC twins and in those stocks that have underperformed in the current upmove. The Nifty has managed to break the 15430 level after 16 weeks of consolidation,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.
”This is the biggest and time-consuming consolidation which will definitely give good support to the market and we can see a further increase above 15000. According to Weekly and Daily formation, the Nifty can stop once between 15500 and 15600 levels. The 15250 and 15100 are big pillars for the market and as long as the Nifty stays above 15100, we can see the level of 16000 to 16200. The strategy should be to buy on dips,” he added.
According to exchange data, the foreign institutional investors were net sellers in the capital market on May 27 as they offloaded shares worth Rs 660.90 crore Brent crude futures, the global oil benchmark, advanced 0.30 per cent to $ 69.67 per barrel.