Making Sense

Supply Update in USD bn Vodafone Plc's proposal to increase its stake in Vodafone India 1.64 Plans by GoI to sell 5% stake in Coal India (likely in december)  1.5 Plans to divest residual stake in Hindustan Zinc and Balco 3.5 Plans to divest 4% stake in Power Grid + fresh issue 1.2

Sorry for the long gap people!! We did come in a striking distance of 64.00 on the USDINR chart and then saw a sharp retracements on Rajan's speech which allayed fears pertaining to domestic oil companies USD demand and on positive global environment. USD Index has retraced 38.20% fibbo level (80.56) of the upmove from 79.08 to 81.48. Interestingly, EUR is appreciating - however, I do not see  EURO above 1.3600 and JPY is depreciating and US 5yr swaps (ag 3m Libor) are at 1.39% crucial support. It'll be interesting to see where we head first - take out 1.3600 on the EURO or strong close on JPY above 100.25 and higher swaps. Broad USD strength wil give us a sense of future direction. Power Grid share sale likely to open on Dec 3 (78.70 cr shares on offer - fresh issue of 60.01 cr shares and divestment of 4% stake i.e. 18.69 cr shares). At tuesday's closing price of Rs. 95 per share it is likely to fetch the govt USD 1.20 bn). We will need to see how much of the inte...

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October payrolls came in at 204K much higher than expected. We saw a sharp plunge in major currencies against the USD and US bond prices.  Monday may again see buying pressure on USDINR and paying in forwards on strong US data. I had earlier shown on the USDINR chart, formation of a falling wedge (reversal pattern) - target for which is 64.00. With 30 - 40 % of the oil demand being moved to the market and broad USD strenght theme, we will see buying pressure on USDINR plus importers who were waiting for further appreciation on the USD would now rush to the market. Second, it also goes to show that authorities are comfortable with 61.00 - 63.00 levels on the USDINR. And increasingly we are seeing a consensus building in the market that USDINR is not likely to appreciate beyond 61.00 levels. So I still maintain my strategy of buying on dips. A number of FDI related flows are in the pipeline (Vodafone, Hindustan Zinc, Balco, Coal India, Eithihad - Jet deal) and anno...

On the USDJPY weekly chart, I see the formation of an ascending triangle and a clear break above 99.00 will see USDJPY attemt to test new highs with medium term target in sight at be 108.15. One can attempt to go long USDJPY with stop below 97.00.

Hope you guys had a great diwali!! Wish you luck in life and trading!! Wow!! After being confined to a narrow range, USDINR finally broke out on the upside and traded a high of 61.96 as it opened gap up on broad USD strength (EUR depreciated 2.45% against USD). Failure to break below 60.80 for an extended period of time is increasingly being seen as market getting more comfortable on trading longs.  Break out on the upside shows USD bullish momentum and may see rupee take out 62.50 - 62.75 in the short term. Demand / Supply update Vodafone Plc's proposal to increase its stake in Vodafone India may see an inflow of USD 1.64 bn (Rs. 10141 crs). Plans by GoI to sell 5% stake in Coal India (likely in november / december) may see inflows of USD 1.50 bn / 9226 Crs (5% of market cap of 184K Crs - crude approximation)) So we need to be watchful of news on Vodafone and government's disinvestment of Coal India and Hindustan Zinc + Balco (USD 3.50 bn) FII ac...