Crucial 61.80 level broken on USDINR

Exit polls showed BJP will win in four out of five states where election was held. Congress may retain Mizoram and lose Rajasthan and Delhi to BJP and BJP will continue to rule in MP and Chattisgarh. The exit poll results were welcomed by market with Nifty soaring 1.30% to 6241 levels and USDINR opening 20 ps lower and touching lows of 61.55 at open on sharp selling. With oil bids coming in we saw USDINR back to 61.88 levels but later closed at 61.76.

A close below crucial 61.80 levels is a very significant price move and exposes downside target of 59.50. One can go short around 61.80 levels with stop loss above 62.40 for an initial target of 60.50 and then 59.50.

I was discussing with a colleague just yesterday that all of a sudden everything seems to be positive on USDINR - CAD concerns have been greatly diminished, fiscal deficit likely to be contained at 4.80% (even though it is more of an accounting camouflage), people like you and me are finally seeing a drop in vegetable prices on bountiful harvest and that to me is the first clear sign of cooling inflation, market liquidity conditions are smooth, we are building on our FX reserves, FII inflows have been robust, FDI inflows are lined up (see demand supply update), Bharti  Airtel's $1 bn debt flow and stability has been restored to market after unwinding of extraordinary measures.

So we are on a very positive note and if the election results of 08th December corroborate exit poll results we may see a further run up to 60.50 on USDINR.