ICICIdirect.com has come out with its report on currency. According to the research firm one can utilise the lows in the USDINR June contract to buy.
Forex (US$/INR): INR strengthens
• The Indian rupee strengthened on Friday on the back of dollar sales by corporates but still posted a ninth consecutive weekly drop, its worst losing streak since the Lehman crisis
• The INR ended at 55.54/55 per dollar, down from the previous day’s close of 56.08/09
• The dollar index against six major currencies was at 82.8, down by 0.3% from the previous day’s close
Derivatives strategy: Buy June contract
• In the currency futures market, the most traded near-month dollar-rupee contract on the NSE closed at 56.1. The US$/INR June open interest was up by 11.1% from the previous day
• The July contract open interest was down 6.9% from the previous day
• We expect the US dollar to attract some buying support on declines against the INR. Utilise the lows in the US$/INR June contract to buy.
Bonds: Yields decrease
• Indian federal bond prices gained for a second consecutive session on Friday, pushing the yield at one point to a one and half month low, on hopes that the central bank will cut interest rates to bolster sagging economic growth
• The current 8.79% 2021 benchmark bond closed at 8.37%, 1 bps lower than the previous close
• Total traded volume on the RBI’s gilt platform stood at Rs 29637 crore as on June 1, 2012 compared to Rs 39808 crore as on May 31, 2012
• The US treasury yield of the 10-year benchmark was at 1.46%, 10 bps lower from the previous day’s close
Equity: Nifty range seen at 4860-4950
• The Nifty opened flattish and traded with a negative bias throughout the session. It finally closed 83 points lower. FIIs were net sellers in the cash segment to the tune of Rs 220 crore while they created shorts in index futures to the tune of Rs 496 crore. India VIX went up from 25.25 to 26.77 (up 6.02%)
• The Nifty is likely to open negative on the back of negative global cues. It is likely to trade in the range of 4750-4840. The trading strategy would be to create short positions if the Nifty resists at around 4825 levels for targets of 4785 and 4760. On the other hand, one can also create long positions if it takes support at around 4750 levels.
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