Daily Market Report: Thursday - November 22, 2012

The Indian Rupee opened at 55.07 levels after closing yesterday at 55.11 levels. The Intraday range for the rupee is expected between 54.85-55.20 levels.

The winter session of parliament begins today. The investors would be looking out for a new set of reforms to be announced by the government.

The Asian equity market gained as fewer Americans filed for unemployment benefits. The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November.

The China's vast manufacturing sector saw expansion in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.

The US is observing a bank holiday on account of Thanksgiving. This holiday means lower volatility and liquidity in the FX market. The absence of U.S. traders can be seen in the tighter trading ranges for rupee.

With no agreement on aid disbursement for Greece, investors expect that the Euro group members meet on Monday to work out the technical details of the package.

As investors wait for a decision, the focus will shift to economic data and growth. Euro zone November flash PMI numbers will be released on Thursday followed by the German IFO report on Friday. If there is a material decline in the PMI or IFO reports, fear of a sharper slowdown in German growth could weigh on the Euro.

The US 10 year Treasury yield is trading higher at 1.68%. The Indian benchmark 10-year bond yield rose 1 bps to 8.21% as a persistent cash crunch added to worries with the central bank yet to announce any bond buys.

Outlook: Exporters sell close to 55.30 at least 30-40% for next 3 months or partially for longer term (8-12 months only) keeping a stop loss of 55 levels. The rupee is still expected to be weak with some dips in between . Uncovered Importers are still recommended to cover on dips close to 54.50-54.80 levels. Overall USD/INR pair remains in a bullish trend.

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