Expect Indian rupee to remain weak today: Karvy

Karvy Stocks Broking has come out with its report on currency. The research firm says from the domestic front, the fiscal deficit data for February is expected to widen, keeping the rupee under pressure. Overall, expect the rupee to remain weak for the day.

On Tuesday, the rupee depreciated by 0.37percent against the dollar, settling at 54.36 from the last settlement’s 54.16. it remained weak tracking the euro and following the domestic markets which ended flat.  The domestic markets broke their seven-day losing streak and witnessed small gains. The S&P BSE Sensex advanced 23.11 points or 0.12percent to settle at 18,704.53,and the CNX Nifty advanced 7.75 points or 0.14percent to 5,641.60,  On Wednesday, US stocks ended on a lower note as Italy stole the dubious honor from Cyprus of representing European concerns. Italian politician Pier Luigi Bersani ruled out the formation of a coalition government.  Yesterday, concerns from the euro-zone coupled with weak US pending home sales pressurized asset class, resulting in the fall of the euro to a near 4-month low. The bond yield moved up by 0.55percent from the last settlement’s 7.9880 to close at 7.9440.  The call money market moved up by 0.65percent from the last settlement’s 7.75 closing at 7.80.

Outlook:  The rupee in today’s trading session is expected to open weak, taking cues from a weak euro that has declined to a four month low at $1.2786. Currently, Asian equities are trading over 1percent lower which should pull the rupee further down. Today being the last day of this week and of this quarter for the Indian markets/banks/institutions, we expect a good amount of dollar demand coming in from the importers ahead of cash payables. Therefore, we expect to see the rupee to trade on a weaker note in today’s trading session.

We also believe the day would be mostly driven by spot activities at the inter-banks and on the derivative products of USDINR. The global economic indicators like the German retails sales and money supply are likely to remain weak while the US’ fourth quarter GDP and consumption should improve. The US jobless claims and Chicago purchasing manager index are expected to be released. These economic numbers should keep the dollar on a positive note, adding to the weakness in the rupee. From the domestic front, the fiscal deficit data for February is expected to widen, keeping the rupee under pressure. Overall, expect the rupee to remain weak for the day.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More