INR opens flat at 71.61 and looks like may trade in India 71.35 to 71.70. Yesterday there was enough pressure for repeat again however we saw PSU banks buying on the lower end of the market. India equity markets continues to see heavy USD inflows (current month till date about USD 3 bn). Refer table below.
On the domestic front, macro issues which are affecting financial sector seems to be reducing and resolution of major issue seems to be in sight. For example there is news of IndiaBulls housing may get a clean chit from MCA; Yes bank has a board meeting today to raise funds; in the forthcoming budget Government is considering scheme to provide big liquidity NBFCs. All these developments bode well for the financial sector and should support overall revival of the economy.
Today there is important data release of India’s quarterly GDP. Some sections of the market believes that the reading might be below 4%. We think market may have some initial reaction to poor GDP numbers. However this could be the bottom and market will start looking at the growth ahead.
On the global front currencies are in “wait and watch” mode awaiting clarity on the US-China trade deal. One interesting observation is that in the last few days currency markets have seen the historic low volatility and have been trading in a very narrow range of few pips. According to us such complacency means a bigger trigger is awaited and a big move in either direction is possible.