DAILY MARKET REPORT: Thursday - December 27, 2012

The Indian Rupee opened at 54.77 levels after closing yesterday at at 54.84 levels. The Intraday range for the rupee is seen between 54.68 - 54.90 levels.

The Foreign investors have invested USD 23 billion in 2012 and taking their total cumulative investment in the country's equity market to an all-time high of USD 125 billion. Moreover, FIIs was also seen pouring money in the debt market and infused USD 6.4 billion during the year.

The mood has turned euphoric with increased expectations of improvement in the economy. Though globally, the macro-economic situation looks stable as of now. The concerns still persist on the domestic side- economic growth which is growing at a lower rate for the last two-three quarters, inflation hovering above seven percent for quite a while and fiscal and current account deficit continue to be high.

The Indian government announced incentives to revive growth in exports as it looks to narrow a trade deficit that has put the country's current account balance and currency under pressure.

The government has also extended a 2%  interest subsidy on rupee-denominated export loans for labor-intensive and small-scale industries by one year to the end of March 2014 to cushion the impact of weak demand indeveloped economies. India's exports fell by 5.95 percent between April and November from the same period of last year, leading to a trade deficit of $129.5 billion.

The Asian equity markets are trading positive as investor believes that there is a chance of U.S. lawmakers striking a deal to avoid a fiscal crunch by December 31, while the yen stayed under pressure on the prospect of drastic monetary easing and massive fiscal spending.

The US 10 year treasury yield is trading at 1.76%. The India's 10-year benchmark bond yield hit a 5-month low on Wednesday, comforted by the central bank's bond purchase announcement, and as the market built up hopes of an interest rate cut in January. The 10 year yield ended down 2 bps at 8.11%.

Outlook: Exporters cover partially around 55 plus levels, while Importers cover on dips around 54.55 - 54.60levels who missed the levels of 54.10 - 54.20. Overall: USD/INR Bullish

 

EUR/USD: The EUR/USD is currently trading stronger at 1.3231 levels. As the European markets were closed on account of the Boxing day, yesterday’s gains in Euro were driven by uncertainties over US budget talks. No major economic reportsare due for release from Europe but jobless claims, consumer confidence and new home sales are expected from the U.S.today. Support is at 1.3068 levels, and the resistance is near 1.3310 levels.

GBP/USD: The Pound is trading on a firm note at 1.6134 levels on account of low volumes as Banks were closed for the past 3 days amid Christmas festival. On the data front, we have BBA Mortgage Approvals for home purchase due for today. The pair is expected to find a support near 1.6050 levels and the resistance is near 1.6300 levels. Overall in a range withbearish bias.

USD/JPY: The yen is currently trading at 85.76 levels. Continuing its weakness against the US dollar, Yen fell below its 27 month low yesterday after Shinzo Abe was officially elected Prime Minister of Japan. He said fighting with the Deflation will be his topmost priority, and he will also force the BOJ to adopt a higher inflation target.  Near term support is at 82.50 levels and the near term  resistance is at 87.00 levels. Target of 84-85 levels achieved and  further target it to 90 levels.

AUD/USD: Australian dollar is trading  at 1.0366 levels. With markets in Australia are closed for the holiday the Australian Dollar was trading flat against the US dollar.  Near term support is seen at 1.0290 levels while immediate resistance is at 1.0588 levels. 

Gold: Gold is trading at $1657 levels. Gold has been trading flat since last couple of days, as all the investors are closelywatching the talks between the White House and Congress to prevent the U.S. economy from plunging into recession next year. 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 $90.86 levels.  The crude oil is trading above its two month high on account of  rise in the U.S.home prices . U.S. home prices rose in most major cities in October compared with a year ago, according to a key report. The improvement is adding to economic growth, which generally boosts energy consumption and lifts prices. Support is at $88.20 levels, whereas strong resistance can be seen near the $93.60 level. Overall range bound.

DI: Dollar index is trading lower lower at 79.60 levels.  The US dollar is trading flat against the majors on account of mixed economic reports released yesterday.  According to S&P Case Shiller, house prices rose 0.66% in the month of October. The Richmond Fed index dropped to 5 from 9 for the month of December. The jobless claims, consumer confidence and new home sales are expected from the U.S. today. 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.)