Nifty & USD/INR Report 24th May, 2012

Daily Nifty Analysis

nifty_24.5.2012_xDirect India

A yet another day of liquidation in equity markets, on basis of risk aversion has taken its toll in the SENSEX that ended below 16,000 marking its lowest level since January 7th, 2012. The uncertainty on the economy has indeed choked investors, which was backed by
the Rupee depreciation. USD/INR in spot has marked its highest level ever at 56.30 amid weak global trends, where SENSEX after marking a 157 drop further added about 80 points fall in the same session, as weakness in thee net importing economy would indeed makes consumption  more expensive.
For today, perhaps some sort of respite could be provided; however we should be watchful during the European session, wherein after a freefall in these markets that recorded a 2% fall, was witnessed, due to Greek issue and failure on providing any sort decision on Summit that was held yesterday.
Today, markets could witness some buying however; if risk aversion intensifies the buying on the counter could turn out to be a huge bout of selling.
Nifty finds its immediate support at 4804, where a breach could push it lower towards 4765 (Low of May 18th). Resistance at 4850 would be well kept for today wherein only a daily close above 4940 would be considered as a meaningful correction.

View on Indian Rupee

USD/INR_24.5.2012_xDirectIndia

The Indian Rupee continued its losing streak against the US Dollar and slipped below the psychological 56 mark on Wednesday. It plunged to an Intra-day low of 56.30, hitting a record low for the sixth straight session before finally closing at 56 levels against the USD. The fall in the Rupee persisted despite uninterrupted assurances and interventions in the currency markets by the Reserve Bank of India. Yesterday’s fall was led by demand for the Greenback from importers and banks amid rising risk aversion in the global markets. The has weakened more than 3% in the last three trading session while from its recent highs in Feb this year, the INR is down by over 23%, making its one of the most under-performing currencies amongst the globe.

Intra-day Outlook
Spot USDINR:
The RSI is its highest level since November 22, 2011 where constant upside has kept market to go short; however if European situation deteriorates then this would be followed by heavy selling in Euro and high yielding assets, causing US Dollar to strengthen.
For the trend we still keep our bias towards upside wherein after achieving our 1st target off 56.25. The objective remains to 56.68 for now (Both Fibonacci extensions). Supports are seen towards 55.95 and then 55.82 for today and only a daily close below 55.45 should be considered as a correction from its consistent upside.

Report by
xDirect India
www.xdirect.in