Nifty & USD/INR Report, 23rd May, 2012

Daily Nifty Analysis

Nifty Analysis-23.5.12_xDirectIndia

Indian markets settled on a lower note as rupee tumbled to an all time low amid fears of slowing economic growth. The market opened positive tracking the US markets which closed in the green yesterday with Dow Jones up more than 1%  on  Monday.  The  rupee nevertheless recovered slightly in the morning at 54.6025 after breaching the 55 mark in yesterday’s session. The upside on the Indian Rupee should be now matched with the US Dollar strength that rose up to 16-month high. The 100 points fall in the Nifty is now going to take its toll further, as importers demand for US Dollar increases as month-end nears. Unless the government does not take necessary stance to
cut down on its subsidy burden there will be demand on the US Dollar considering its strength on the board. For today markets are to remain under pressure and thus may trade on sideways to bearish mode for today.

Nifty has its immediate support at 4804, a breach of which would test levels around 4765 (Low of May 18th, 2012). Resistance should be maintained 4840 and then 4885 and only a close above levels of 4885 should be considered as a meaningful correction in the indice.

View on Indian Rupee

USD/INR-23.5.12_xDirectIndia

The Indian Rupee opened on a positive note yesterday trading near the 54.65 level (against the US Dollar after the central bank introduced measures preventing banks from taking large positions in currency exchanges. Though the
optimism was short lived, it tumbled marking another day of record –low levels closing at 55.39 against the US Dollar. The home currency fell to touch an intra-day low at 55.47 as traders sold the INR owing to reeling growth problems in the domestic economy coupled with rise in the Dollar index.

Intra-day Outlook

Spot USDINR: In the domestic space, the Indian Rupee is expected trade in a narrow range post the persistent losses in past few trading session, with bias still on the weaker side. Volatility is seen continuing on the higher side wherein gains may come only if some concrete steps are taken by the RBI or the Indian government

A certain downside could be witnessed in the pair, where its initial support at 54.60, is well kept; the pair now holds its upside resistance of its bullish trend channel dated from March 8th high of 50.29 at 55.82 hence a breach should form it towards 56.25 and then 56.68 (Fibonacci extensions). Support of 54.60 is not held then wee may see a correction towards 53.95 levels in today’ss session.

Report By

xDirect India

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