DAILY MARKET REPORT: Monday - December 24, 2012
The Indian Rupee opened at 55.10 levels after closing at 55.07 levels on Friday. The Indian Rupee (INR) lost around 1.7% week on week on the back of dollar demand. The Intraday range for the rupee is seen between 55.00 - 55.25 levels. The Indian governmen
The Indian Rupee opened at 55.10 levels after closing at 55.07 levels on Friday. The Indian Rupee (INR) lost around 1.7% week on week on the back of dollar demand. The Intraday range for the rupee is seen between 55.00 - 55.25 levels.
The Indian government has raised the ceiling for foreign direct investment (FDI) in asset reconstruction companies (ARCs) to 74% from 49%, according to a government statement late on Friday. The figures released on Friday showed that Foreign direct investment (FDI) inflows into India jumped 67% in October to USD 1.94 billion, but inflows for the current financial year were still down.
The winter session of parliament ended on December 20th. This session was productive in the last two years with the passing of important bills such as foreign investment in multi-brand retail, companies bill and banking regulation bill. A swing of policy measures is expected now with talks to have another round of diesel price hikes which would be positive of the markets.
From US, the House Speaker Boehner cancelled the vote on "Plan B" as it would have failed to pass by a few votes. Boehner ended a press conference and the House Speaker said that he will continue to work on a fiscal cliff deal but that "trying to bridge these differences" is difficult. He reiterated that the House, Senate, and Obama need to work together.
The Asian markets are trading mixed on low trading volume as U.S. budget talks appeared to stall ahead of the Christmas holiday. The Equity volumes are expected to fall sharply next week with market participants away on a holiday break.
The Liquidity tightened considerably last week with the market borrowing from RBI crossing Rs 170,000 crores. Third quarter advance tax payments led to outflows from the system causing a liquidity drain. Liquidity as measured by bids for repo in the LAF (Liquidity Adjustment Facility) of the RBI averaged Rs 159,000 crores on a daily average basis against an average of Rs 97,000 crores seen in the week before last.
The RBI will want liquidity conditions to remain easy for credit growth to pick up and it will have to undertake more OMOs (Open Market Operations) to infuse liquidity into the system. RBI has carried out three bond purchase auctions in December 2012 and has bought a total of Rs 31,000 crores of bonds through the auctions.
Outlook: Exporters cover partially around 55 plus levels, while Importers cover on dips around 54.55 - 54.60 levels who missed the levels of 54.10 - 54.20. Overall: USD/INR Bullish
EUR/USD: The EUR/USD is currently trading stronger at 1.3182 levels. Despite the “not so good” data from Germany, the Euro held on to its gains against the US dollar as fiscal cliff talks in the US failed to give direction to the market. In the meanwhile, Italy’s Prime Minister Mario Monti has resigned but he has indicated that he might consider returning after the elections in February. Support is at 1.3040 levels, and the resistance is near 1.3309 levels
GBP/USD: The Pound is trading at 1.6168 levels. The UK’s current account deficit came in better than expected at Pound12.8bn in the third quarter v/s Pound 17.4bn previous quarter. Support is near 1.6105 levels and the resistance is near 1.6300 levels. Overall in a range with bearish bias.
USD/JPY: The yen is currently trading at 84.39 levels. The Yen continued its weakness after the incoming premier Shinzo Abe renewed pressure on the Bank of Japan to adopt a 2 percent inflation target. There were no major economic data releases from Japan. The central bank left its overall assessment of the economy unchanged in their December monthly report. This was the first steady reading in 5 months as the BoJ had downgraded its assessment every month for the past 4 months. Near term support is at 82.50 levels and the near term resistance is at 85.50 levels. The yen is weakening towards 84-85 levels as expected.
AUD/USD: Australian dollar is trading at 1.0405 levels. It fell against the US Dollar as US lawmakers remained divided on the budget negotiations and House Speaker John Boehner failed to gather support for his “Plan B” . Near term support is seen at 1.0290 levels while immediate resistance is at 1.0588 levels.
Gold: Gold is trading at $1656 levels. The gold prices are trading on a lower note after a setback in U.S. talks to avoid a fiscal crisis prompted investors to stay cautious. Near term support is at $1647 levels, whereas strong resistance can be seen near $1670 levels. Look for further dips to initiate buys.
Oil: WTI Crude is trading at $88.52 levels. Support is at $87.75 levels, whereas strong resistance can be seen near the $90.30 level. Overall range bound.
DI: Dollar index is trading lower lower at 79.62 levels. The US dollar index is supported by the uncertainties prevailing over the fiscal cliff talks. The budget plan proposed by the Republican speaker of the U.S. House of Representatives, John Boehner, failed to win support from his own party, deepening the worries that U.S. lawmakers might not reach a deal to avoid the fiscal cliff by year-end. On the data front, Orders for durable goods increased 0.7 percent last month after a 1.1 percent gain in October that was larger than previously estimated. Strong near term support seen near 78.90 levels and the resistance is at 80.20 levels. Overall the index is bullish.
(Source: Corporate Communications, India Forex Advisors Pvt. Ltd.)