Go short in USDINR for intraday: Nirmal Bang

Nirmal Bang has come out with its report on rupee. The research firm recommends investors to go short in USDINR pair for intraday and also from short-term perspective. The pair is likely to test 54.50 in spot in short-term.

The Indian rupee dropped for a fifth straight day, weakening to its lowest level in three weeks on Tuesday as heavy dollar demand from oil and defence firms offset inflows into the domestic stock markets. The partially convertible rupee closed at 54.85/86 per dollar, after having dropped as low as 55.0550, its weakest since Nov. 29. The unit had closed at 54.84/86 on Monday.  Exporters also refrained from selling dollars at current levels on expectations of further weakness after the central bank disappointed markets by keeping key rates on hold at its policy review. Though the outcome was widely expected, investors had been hoping for a surprise cut in rates.

The central bank maintained a status quo ignoring government pressure to reduce borrowing costs, but said it was shifting its focus towards boosting a flagging economy, raising the odds of a rate cut as early as January.  The rupee can open slightly strong tracking the gains in Asian peers. Moreover, the consistent inflows and the prospects of a rate cut in January are likely to support the rupee going forward. We recommend investors to go short in USDINR pair for intra-day and also from short-term perspective. The pair is likely to test 54.50 in spot in short-term.

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