Rupee ends flat at 75.60 against US dollar even after heavy equity buy

The Indian rupee settled for the day on a flat note at 75.60 (provisional) against the US dollar on Tuesday, even as the domestic equities witnessed heavy buying on the last day of trading of the 2019-20 fiscal.

Forex traders said market participants remained cautious as currency markets will remain shut for the next couple of sessions.

Forex markets will remain shut on April 1 for the annual closing of banks and on April 2 on account of Ram Navami.

The rupee, which opened on a positive note at 75.52, settled for the day down 1 paise at 75.60 against the American currency.

During the day, the domestic unit touched a high of 75.31 and a low of 75.66.

On Monday, rupee had settled at 75.59 against the US dollar.

The rupee has witnessed a sharp decline of over 9 per cent in fiscal year 2019-20. The local unit has depreciated by 646 paise or 9.34 per cent in FY20. On March 29, 2019, the rupee was quoted at 69.14 to the dollar.

Besides, the domestic unit suffered significant loss in the January-March quarter.

"The rupee marked the biggest quarterly loss amid foreign fund outflows, weaker domestic economic data and Coronavirus outbreak. Foreigners have withdrawn more than USD 14.5 billion this quarter," HDFC Securities Head PCG & Capital Markets Strategy V K Sharma said.

"Going ahead, the trend in Asian currencies and foreign fund flows will decide the action in rupee. Spot USD/INR is having near-term support at 74.70 and resistance at 76.30," Sharma added.

Rupee hits record low of 74.5 against US dollar amid coronavirus scare

The Indian rupee dropped to a record low on Friday, weighed down by worries over the coronavirus pandemic that has prompted investors to dump riskier assets and move towards safe havens.

The dollar stood tall on Friday as investors scrambled for the world's most liquid currency amid deepening panic while the euro nursed losses after the European Central Bank disappointed by not cutting rates.

The partially convertible rupee dropped to a record low of 74.5075 against the dollar before recovering slightly to trade at 74.4445 by 0355 GMT.

Traders expect the central bank to step in to prevent further sharp falls in the currency but don't see it protecting the rupee at any particular level.

Commodity outlook by Tradebulls Securities: Buy lead, natural gas

Indian rupee has strengthened against the US dollar for 7 days on the trot. The latest decline takes the price to the lowest levels in more than a month, mainly driven by the ongoing strength in the Indian rupee. Price is trading below 50 and 20 day moving average so there is bearish bias in the medium term. Below 71, there is room till 70.50 till 70.20. The trend reversal will only come above 71.30.

Gold: It’s been 5 days in a row that gold prices have fallen in negative territory. Market had already discounted news of no rate cut from the Federal Reserve, but when it stated that it will not cut any interest rate for 2020, US Dollar fell which helped gold recover but is still not out of woods. Lately, it seems as if the market is starting to price some type of an agreement between the Americans and the Chinese going forward. Gold is losing its luster with the yield curve no longer inverted and recent economic reports suggesting improving economic conditions.

Strong Indian rupee is also keeping prices under check in MCX. Although we also cannot deny that gold has strong support at $1450, it is expected to remain under pressure till Rs 38,100 is not breached in MCX or $1490 is not breached in COMEX.

Silver: Bears have regained the overall near-term technical advantage in Silver and restarted a more than three-month-old downtrend on the daily bar chart. The metal is languishing near its support of 43,400 and breach below that could open doors till 42,800. It is crucial for silver to close above 44,300 for bulls to gain any momentum on the upside. Market still looks sell on rise as long as 44,300 is not breached. In COMEX, silver needs to break above $17.

Crude oil is stuck in a narrow range and going back and forth in the intraday session making new high and low in relatively short time period giving no indication of a clear trend. Recently, crude oil prices fell sharply after US inventory reported more than expected crude oil but prices recovered swiftly and held the important support of 4,100 in MCX giving impetus that trend still is positive. Crude oil has strong resistance at $65 and if it breaches $65 then next resistance would be $67.5. Support is at 200 DMA at $63.3 and next support is at 50 DMA at $62. All things being equal, this is a market that is trying to break out but has a lot of work to do in order to make that happen.

OPEC did a bit of a production cut, but concerns about demand still cause issues. In MCX, Crude oil has resistance around 4225-4250 and support around 4100. Crude oil is expected to trade in the range of 4100-4225. Natural gas market is in full bear mode and might be a good thing for those investors who are waiting in sidelines for entry. Over the weekend, CFTC managed money net position shows the largest net short position in the last 5-years. Natural gas production remains strong; hovering above 95.0 Bcf/d. Strong production combined with a much warmer outlook over the next couple of weeks puts bears in firm control of the market. Triple-digit natural gas withdrawals not anticipated over the next few weeks after warmer trend in the forecast models over the weekend.

Recommendation:

Buy Lead: TGT 157 Stoploss 151.50

Lead is making rounding bottom chart pattern on the daily scale. It has taken support around 151.60 and recovered till 153. The short term moving average of 20 and 50 have given buy cross over while price action is above 200 day moving average. RSI_14 is neutral with no divergence so we recommend long positions with target of 157 and stoploss of 151.50.

Buy Natural Gas: TGT 170 Stoploss 155

Natural Gas has made double bottom at 155. The price action is near to its double bottom formation and recent steep fall indicates that we might see some sort of short covering around important support levels. Natural Gas has made ‘harami’ candlestick pattern at the support level of 156 and bounced back. So we expect this pullback to carry till 170. So buy natural gas at the current rate with an expected target of 170 and stoploss of 155 closing basis.

Bullish bets on Indian rupee rise ahead of Lok Sabha elections 2019: Poll

Bullish positions in the Indian rupee firmed over the past two weeks, a Reuters poll showed on Thursday, ahead of general election, while long positions in the yuan unwound on concerns over slowing domestic demand and uncertainty around Sino-U.S. trade talks.

Investors piled on long rupee bets in a return to bullishness earlier this month after a year, the poll of 12 respondents showed.

The confidence rode on brightening re-election prospects of Prime Minister Narendra Modi and his ruling Bharatiya Janta Party, translating into inflows of $5.99 billion so far this year into equities.

India will hold general elections in seven stages starting April 11.

Meanwhile, bullish bets on the Chinese yuan receded after a raft of weak economic data showed faltering momentum of external trade and domestic demand, and lack of clarity on trade negotiations between China and the U.S.

"A moderate stimulus package and insistence on deleveraging indicate Beijing's increased tolerance for slower growth," DBS Bank said in a note.

Chinese Premier Li Keqiang said mid-March the government had additional monetary policy measures as its disposal to support economic growth, and that he hoped trade talks with the U.S. would achieve results.

Reuters on Thursday reported that China and the U.S. had made progress in all areas in trade talks but sticking points still remained and there was no definite timetable for a deal.

Meanwhile, investors upped their bearish bets on the Indonesian rupiah to levels last seen in mid-December.

A global economic slowdown and a sudden end to the U.S. Federal Reserve policy tightening have raised expectations of rate cuts in Asia.

Besides Philippines and India, Indonesia has room to reverse some of last year's multiple interest rate hikes aimed at protecting the local unit from emerging market turmoil, economists said.

Long positions on the Philippine peso reversed course, the poll showed.

Last week, the Philippine central bank kept its benchmark interest rate steady for a third straight meeting. However, it warned that there were risks to economic growth in 2019 if a budget impasse in Congress was not resolved soon.

Investors notched up their long positions on the Thai baht and the Singapore dollar, while cutting bearish bets on the South Korean won and Taiwan dollar.

The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long U.S. dollars.

The figures include positions held through non-deliverable forwards (NDFs).