Daily Market Report: Friday- October 12, 2012

The Indian Rupee opened stronger at 52.61 levels after closing yesterday at 52.69 levels. The recent announced policies supported the local markets for a while but the slowing world economy and persisting Euro crisis is making the investors cautious.

Today will be an action packed day with Infosys and HDFC Bank announcing their quarterly results and IIP data. Markets would also keenly track IIP data for the month of August. A weaker-than-expected August industrial output data on Friday will be a key input ahead of the Reserve Bank of India's policy review on October 30. The IIP data for the month of September is expected to have grown by 0.8% compared to 0.1% in the month of July.

The Asian peers are trading strong after U.S. jobless claims fell, boosting the earnings outlook for the region's exporters.

For the first-time applications for U.S. jobless benefits dropped 30,000 to 339,000 last week, the fewest since February 2008.

The euro steadied around $1.2935 after three days of declines. The dollar was broadly flat, having been pushed up around 0.5% on the week by investors seeking safety in the U.S. currency.

The US 10yr treasury yields is steady at 1.68%. The India's benchmark 10-year bond yield closed at 8.16%, unchanged from Wednesday's close.

Outlook: Rupee has made a temporary short term bottom below 51.50 levels. Exporters had been asked to sell at 53.00 levels , importers cover close to 52.00-52.50 levels. Exporters maintain selling partially only in long term. Short term use any rupee weakness to get maximum rate for incoming dollars. In case of any surprises pre-utilize long term export covers. This strategy will protect you from any immediate rupee weakness which we just saw last 3-4 days. Broad range for couple of months 51.80 -54.00 provided we do not get any surprises from international factors.

(Source; Corporate Communications Team, India Forex Advisors Pvt. Ltd. )