Rupee may continue to gain; sell on rally: Karvy

Karvy Stock Broking has come out with its report on currency. According to the research firm, rupee should continue to gain, so one can sell at higher levels for the day.

Last day huge gains were noticed in global stock markets, as congress and the White house approved a large tax and spending package to avert the fiscal cliff in US. Therefore, today Asian markets are trading higher by around 0.50%. Moreover, increase in China non manufacturing PMI data is also supporting the Asian markets to trade firm. The SGX NIFTY future is also trading up by 21.00 points may support domestic stock market to open on a positive note and extend gains to rupee. However, euro currency is currently trading down by 0.13% at 1.3130. In fact we have seen a huge correction in euro last day as it failed to breach $1.3300. As the day progresses, we have data from Germany and US which may provide a mixed picture to Indian rupee. So, markets might be eyeing on euro correction along with higher Asian stock markets. Therefore, we may see a mixed or flat opening of rupee and subsequently the euphoria may continue and rupee should continue to gain. Hence, we recommend selling at higher levels for the day.

USD/INR Spot
On Wednesday, rupee ended on weak note near the two week lows of 54.35 forming Doji candle stick pattern. Momentum indicator RSI-14 has shown a sharp decline from the highs of 0.55 to 0.43 and is witnessing weakness in the pair in the short term. The DOji candle stick formation is not suggesting any clear trend for the day and we could expect a minor pullback and could remain on a subdued range. However the overall trend is still looking weakon chart. Major support is witnessing around 54.13 levels of 38.2% Fibonacci retracement level for range (51.35-55.88) and resistance are witnessing at 54.50 then 54.65.

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