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May 22, 2013, 11.36 AM | Source: Moneycontrol.com

Indian rupee to trade higher; buy on dips, advises Karvy

Karvy Stock Broking has come out with its report on currency. According to the research firm Indian rupee (USDINR) is expected to trade higher for the day. One can buy on dips. Resistance is seen at 55.61 followed by 55.74.

Karvy's research report on currency -

In today's session, Asian equities are trading marginally higher, tracking the bullish tone of the US market. The Bank of Japan will announce interest rate and asset purchase decision later on today. The BoJ is likely to keep its interest rate unchanged while continuing its asset purchase program. This may support Asian equities and, thereby, the rupee against dollar. Moreover, the euro is trading up by 0.15 percent against the dollar. European policymakers will meet this afternoon to discuss economic growth concerns and ways to overcome debt. Europe will release its trade balance number today, which is expected to improve on the back of higher export compared to import. This may support the euro and might pressurize the dollar against the rupee. The Federal Reserve expected to meet today to discuss its quantitative easing program. The Fed is likely to continue the QE program to support economic growth. This may pressurize the dollar. Hence, we expect the rupee to trade positive though gains could be limited due to the Reserve Bank of India buying $820 million to bolster reserves. Overall, we expect the rupee to stay marginally positive in today's session.

After a gap-down opening, the dollar-rupee pair surged to hit a new high on Tuesday at Rs 55.5275. The rupee witnessed a low of 55.0225 and managed to close near the 55.4675 level, gaining 0.50 percent.The daily candlestick depicts a big green maribozu pattern, suggesting that the buyers are dominating the session. Based on the Fibonacci retracement, the pair has retraced 100 percent of its swing high of 55.50 and swings low of 53.73. Strong support is seen at the 55.33 mark, a fall below which could find support at the 55.21 level. The resistance is seen at 55.61 followed by 55.74. Overall, we expect the pair to trade higher for the day. Our recommendation is to buy on dips, says the research firm.

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