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 activity data has been very interesting. Equity has seen an inflow of INR 15700 Crs (USD 2.55 bn) in the month of Oct and debt has seen a pull out of INR 13,578 crs (USD 2.22 bn) showing a marginal inflow of USD 220 mn.
For the calendar year 2013, we have seen a net inflow of USD 6 bn (converted @ spot rate of 61.57). Foreign exchange reserves for the week ended Oct 25 saw an increase of USD 1.828 bn taking the total reserves to USD 2.829 bn.
RBI has raised over USD 12 bn through the swap window. The inital market estimates were for USD 15 bn through the swap window and on a very optimistic note USD 20 bn. As RBI reaches towards garnering USD 15bn , it will be interesting to see how it responds - does it close the oil swap window / withdraw the facility prematurely???
So we did touch 62.70 on the S&P news
ReplyDeleteverbatim - "Barring an unexpected deterioration of the fiscal or external accounts before the election, we expect to review the rating on India after the next general elections when the new government has announced its policy agenda. If, we see continued policy drift, we may lower the rating within a year")
USD Index appears to have bottomed out 79.20 levels as can be seen in the EUR , GBP and JPY levels. EUR fell a whopping 234 pips off days high.
We may see continued USD strength. Rupee likely to open weaker in line with broad USD strength theme. Forwards saw massive paying and that paying may well trickle onto tomorrow.
The Foreign Investment Promotion Board will take a decision on November 13 on Vodafone's proposal to raise its stake to 100%.
Economic Affairs Secretary Arvind Mayaram today said "Rupee weakness is due to OMC forex demand being moved to market. 30-40 per cent of OMC demand has moved to market". This was exactly as I had mentioned in my earlier blog. I must definitely say it's a smart move so as to avoid panic reaction.