Market Highlights & Commentary:
- INR open weaker at 71.78 ahead of RBI board meeting and may trade the day between 71.50-72.08 under two way price action. INR currently trading around crucial levels, if price closes above 72 then possibility of 72.70-73.00 in coming days will increase.
- RBI Board meeting: RBI is all set to meet today to discuss on wide rage issues and important decision are expected today. Issues including RBI’s autonomy, fresh development over prompt corrective action(PCA), restructure over small scale loans and transfer over surplus reserve to government. Expect volatility after Rbi board meeting.
- Also with inflation down to multi months low at 2.3%, policy makers are may change its policy stance to neutral from calibrated.
- In overseas markets, European central bank announces (ECB) to end QE starting from this month. While keeping key lending rate unchanged at 0%, ECB chief Mario Draghi indicated possibility of rate hike in 2019. Overall the ECB monetary stand was in line with market expectation hence no major reaction was seen, EUR fell marginally.
- Oil price traded higher around 61.50 levels after reports claimed that Saudi Arabia plans to cut oil to U.S.
- In addition, India’s trade deficit figures are scheduled to be released later in the day at 5.30 pm. Fall in oil price is likely to narrow down trade deficit to USD 10/11 Bn, last reading stood at USD 13.98 Bn.
Technical Corner & strategy for the day:
- Suggest to not hedge any LIBOR based interest as the same is expected to remain soft. On currency front, do long term export hedging at upticks newt 72,10 and near term import around 71.55
- USDINR after yesterdays fall to 71.50 is increasing possibility that if price fails to hold above 71.45-71.50, more weakness can be seen, possibility 69.80-71.00 in coming days.
- GBPINR currently around 90.65 levels and looks to be mixed below 91. If price breaks below 90 levels, possibility of 88.80-89.00 levels in coming days still exists.
- EURINR has recently tested 82.80 and currently seeing some retracement around 81.86. Price is likely to find support 81.70 and retest 82.80 in coming days.
Important Economic Data and Events:
- December 14: India’s trade deficit for Nov’18
- December 14: RBI meeting
Yesterday’s Market Recap:
- Yesterday ahead of RBI meeting no major reaction was seen in INR after it opened with major strength at 71.69. INR ended the day on flat note at 71.68 after trading mixed between 71.50-71.72. Other major currencies too ended the day little changed against INR, except GBP.
- The benchmark NSE to remains cautioned ahead on RBI board meeting and ended the day with marginal gains.
Market Movements & Performance:
