Buy USDINR at 55.40-55.25; tgt: 56: Karvy Stock Broking
Karvy Stock Broking has come out with its report on currency. As per the research firm, one can buy USDINR at around 55.40-55.25 for target: 56.00 then 56.50 with Stop Loss below 54.95
Karvy Stock Broking has come out with its report on currency. As per the research firm, one can buy USDINR at around 55.40-55.25 for target: 56.00 then 56.50 with Stop Loss below 54.95
The Week Ahead- Rupee to remain Volatile
- European and Domestic equities to drive rupee
- Strong Dollar demand to continue in next week
Fundamental Review: Last week, the rupee fell another 1% against the greenback. The decline was in line with peers as nearly all Asian currencies depreciated against the greenback. The rupee declined 1.5% W/W, hitting a new lifetime low of 56.37. However, by the end of the week, some profit-booking as well as remittances from EEFC accounts helped the pair reverse some of the decline as it gained by nearly one rupee. The domestic equity indices also recovered in the last two days, after having fallen more than 2% W/W, finally ending with minor gains of half a percent.The one-month offshore non-deliverable forward contracts are at 55.80. In the currency futures market, the most-traded, near-month dollar-rupee contracts on the National Stock Exchange (NSE), the MCX-SX and the United Stock Exchange were all around 55.73, on total volumes of US$20.85 billion.Outlook
In accordance with our view last week, the rupee fell further and went on to hit new lifetime lows of 56.37. This week is expected to be an important one for the currency. On the domestic front, the economic factors will be important trend indicators for the rupee in the short term. The data-flow starts with the Q1FY13 GDP growth on May 31 which is expected to show another downtick. According to a Bloomberg survey, it is expected to come in at 6.0%, which is lower than last quarter’s 6.1%. On June 1, we have the import and export figures for the month of April coming in, and we could see a negative number in that too in the context to exports. Both these are expected to bring the rupee down further. So, this week, domestic factors indicate the trend to be on a lower side.On the international front, we have seen the Dollar Index close on a higher note for another week, continuing its four-week rally. Investors still continue to invest in the safety of the dollar. Going forward, we expect the dollar to strengthen as the Euro crisis deepens. On the economic front, all eyes would be on the labor market, and it could show an uptick this week. The ADP Employment change is expected to come in better at 150,000 compared to 119,000 the last time around. The change in non-farm payrolls is also expected to improve. This would support the US dollar this week.
Overall, for the coming week, the rupee could continue to depreciate on the back of slowdown in domestic growth expectations. Moreover, with the dollar looking stronger globally, we could expect the rupee to remain under pressure this week.TECHNICAL SNAPSHOT
The week has been a volatile session for the rupee. After hitting a new lifetime high of 56.38 in the initial days of the week, the pair started declining in the latter part, finally closing at 55.36, up 1.74%. Currently, the rupee is witnessing a strong support at 55.10-55.00 of a trendline drawn by connecting the higher tops. If it breaches and sustains below this level, then the rupee could test lower levels. Even on the upper side, a major resistance is evident at 55.65, and a sustained breakout above this level may see the pair continuing it upward rally. For the week, we expect the rupee to remain in a stiff range between 55.00-55.70, and any breakout on either side will confirm the trend. However, the overall trend shows an upward bias. This week, supports are evident at 55.10 then 54.32.Recommendation: Buy at 55.40-55.25 TP 56.00 then 56.50 SL below 54.95Disclaimer: 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 
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