FX Market Insight
USD/INR Spot reference {77.34}: Friday, USD/INR had sharp gap up opening at 76.6200 levels tracking sharp selloff in Asian equities and Chinese Yuan depreciation against previous day close of 76.2550. After opening the pair briefly went up to 76.7200 levels from where it saw appreciation and slowly it came down near 76.5700 areas. During the afternoon session after Axis Mutual fund fraud news we saw abrupt dollar buying which suddenly took the pair to a high of 76.9700 before closing at 76.9150 levels.
Broad Market Snapshot:
Last week every asset class was on a rollercoaster ride as central bankers (FED, BOE, and RBA) all around the globe tightened monetary policy to fight inflation. The focus for the current week will be US CPI data. Investors, as well as the FED, will be watching to see if recent lockdowns in China and the Russia/Ukraine war continued to cause supply chain issues during April 2022.
Oil market to remain tight given OPEC will stick to their meager output increase strategy and US production struggles to ramp up despite rising rig counts. China will not be abandoning their zero-COVID policy anytime soon and that will keep the short-term crude oil demand outlook vulnerable. Oil traders will continue to watch for developments with the EU making progress towards Russian energy ban.
India’s CPI inflation release on Thursday this week will also be a key risk event. Any fears in the market that the RBI will be hiking interest rates too quickly will spark negative sentiment in the Indian equity market.
USD/INR Price Action and Technicals: Presence of negative momentum in short term charts suggest that it is more likely to stay below 77.400 and drift lower in correction towards 77.00-76.95 support zone. Next important support would be near 76.70-76.75 areas. While holding above all time high at 77.3000 could strengthen the scope for further up move towards 77.6000 levels.
Range for the day: 77.00 to 77.4000
Equity Insights
Indian Equity
The market is expected to open in the red, with the SGX Nifty indicating a 204-point gap-down opening for the wider index in India.
At the closing on Friday, the BSE Sensex had dropped 867 points to 54,836 and the Nifty50 had down 271 points to 16,411, while the Nifty Midcap 100 and Smallcap 100 indexes had lost 1.8 percent and 2.5 percent, respectively.
The pivot charts show that the Nifty’s important support level is 16,340, followed by 16,269. The important resistance levels to monitor if the index rises are 16,483 and 16,555.
Other Equity
As Asia-Pacific equities slump, Japan’s Nikkei 225 loses 2%; China’s April trade data is expected.
In early Monday trading, Asia-Pacific stocks fell.
Asia-Pacific stocks fell in early Monday trade as investors awaited the publication of Chinese trade statistics for April.
The Nikkei 225 index in Japan plummeted about 2%, leading to losses across the region’s main markets, while shares of Fast Retailing tumbled more than 5%. The Topix fell by 1.32 percent.
In other markets, the Kospi in South Korea was down 0.86 percent, while the S&P/ASX 200 in Australia fell 1.56 percent.
Outside of Japan, MSCI’s broadest index of Asia-Pacific stocks fell 0.78 percent.
Hong Kong’s markets are closed today due to a vacation.
Commodity Insights
OIL
International benchmark Brent oil futures fell 0.2 percent to $112.17 a barrel in the morning of Asian trading hours. Crude futures in the United States fell 0.36 percent to $109.37 a barrel.
Following a recent rise from levels below 103.2, the US dollar index, which monitors the dollar against a basket of peers, was at 103.901.
The Japanese yen was trading at 130.78 per dollar, down from depths below 129 recorded last week. Following a decline from over $0.721, the Australian dollar traded at $0.7026.
Disclaimer: All information in this report is collected from various sites on the internet. Although we have taken all precautions for the correct representation of data however we do not take any responsibility for any errors and omissions. The technical analysis and views expressed are the author’s own views. We are not responsible for any losses on account of following the same.
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