Share Market Highlights: Nifty closes below 19260, Sensex below 64840; Adani Enterprise, BPCL among the top losers

Share Market News Today | Sensex, Nifty, Share Prices Highlights: Domestic equity indices NSE Nifty 50 and BSE Sensex ended in the red on Thursday. NSE Nifty 50 closed at 19,253.80, while the Sensex closed the trading session at 64,831.41. Smallcaps continued to make gains, with Nifty Smallcap 250 and Nifty Smallcap 50 adding 1.04% and 0.36% respectively. Bank Nifty and PSU Bank were the top losers among sectoral indices, while the gains were led by Nifty Realty and IT.

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Share Market Today | Sensex, Nifty, BSE, NSE, Share Prices, Stock Market News Live Updates

15:37 (IST) 31 Aug 2023 Markets at close

The NSE Nifty 50 closed at 19,253.80, while the Sensex closed the trading session at 64,831.41.

14:51 (IST) 31 Aug 2023 Adani Ports, BPCL among top losers

Adani Ports & Special Economic Zone and BPCL are among the top losers on NSE Nifty 50 with losses of 3.40% and 2.83%, respectively.

14:22 (IST) 31 Aug 2023 Bank Nifty sheds over 260 points

Bank Nifty shed as much as 266.10 points, or 60%, to 43,966.50. IndusInd Bank and Bank of Baroda were among the top losers, with 2.02% and 1.93%, respectively.

13:46 (IST) 31 Aug 2023 Mphasis adds 3%

Mphasis is currently trading at a price of Rs 2,440, reflecting a 3.13% increase in its stock price.

13:36 (IST) 31 Aug 2023 JFS continues to gain

The share price of Jio Financial Services surged 4.99%, as reports suggested Reliance Industries’ demerged financial services arm might be excluded from Sensex today.

12:51 (IST) 31 Aug 2023 Nazara Tech adds 8%

Nazara Technologies share price gained over 8% to Rs 814 as the firm is mulling a fund raise by issuing equity shares on a preferential basis.

12:06 (IST) 31 Aug 2023 JFS jumps 4.8%

Jio Financial Services shares gain up to 4.8%, as reports suggested Reliance Industries’ demerged finacial services arm might be excluded from Sensex today.

10:57 (IST) 31 Aug 2023 Adani group shares tank

Shares of Adani group companies listed on the stock exchange witnessed a decline of up to 2%. This fall come after the release of fresh details by the non-profit Organized Crime and Corruption Reporting Project (OCCRP) the previous day, alleging that the Adani Family associates funneled millions into purchasing their own group’s shares via obscure investment funds located in Mauritius.

10:56 (IST) 31 Aug 2023 Derivative outlook

Nifty weekly contract has highest open interest at 19500 for Calls and 19300 for Puts while monthly contracts have highest open interest at 19500 for Calls and 19300 for Puts. Highest new OI addition was seen at 19450 for Calls and 19350 for Puts in weekly and at 19450 for Calls and 19350 for Puts in monthly contracts.

10:06 (IST) 31 Aug 2023 Aeroflex Industries lists with 83% premium

Aeroflex Industries has made a remarkable market debut, opening at Rs 197.40 with an 83% premium compared to its issue price of Rs 108 apiece.

09:28 (IST) 31 Aug 2023 Monsoon woes drag markets

“Unless the rains revive soon, the economy and markets will come under a cloud. It is important to remember that the RBI’s projection of FY24 inflation at 5.4% is based on a normal monsoon. Presently, the probability of a deficient monsoon is high. This will impact GDP growth and keep inflation elevated. The impact on the FMCG sector will be high. Investors may consider tweaking their portfolio with higher weightage for more inflation-proof segments like pharmaceuticals and export oriented sectors like IT.”

– V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

09:23 (IST) 31 Aug 2023 Gold outlook

“Gold reached a three-week high due to disappointing U.S. economic data, accompanied by silver touching a four-week peak in early trading. The dollar’s weakening, along with U.S. 10-year bond yields slipping below 3.15%, acted as catalysts, enhancing the appeal of precious metals. In INR terms, gold’s support lies at Rs 59,200 and Rs 58,950, with resistance at Rs 59,650 and Rs 59,810.”

– Rahul Kalantri, VP Commodities, Mehta Equities

09:19 (IST) 31 Aug 2023 Markets at open

Indian equity benchmarks NSE Nifty 50 and BSE Sensex saw a tepid open on Thursday. Nifty opened at 19,375.55, while Sensex gained around 90 points to begin the session at 65,178.33.

09:05 (IST) 31 Aug 2023 Technical View

“The short term trend of Nifty remains choppy. The lack of strength to sustain the upside bounce on Wednesday could possibly drag Nifty down to its immediate supports of 19250-19200 levels in the short term. On the upper side, the area of 19450 is likely to be a strong resistance,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

08:37 (IST) 31 Aug 2023 Bank Nifty outlook

“The Bank Nifty index experienced a significant bearish takeover, leading to a rapid correction of 600 points from the day’s high. As the index navigates this downward movement, its next significant support on the downside is positioned at 44,000. This level is crucial, given the substantial open interest built up on the put side.The overall market sentiment remains bearish, with considerable resistance anticipated around the range of 44,500 to 44,700 levels,” said Kunal Shah, Senior Technical & Derivative analyst at LKP Securities.

08:23 (IST) 31 Aug 2023 FII, DII data

Foreign institutional investors (FII) sold shares worth net Rs 494.68 crore, while domestic institutional investors (DII) bought shares worth net Rs 1,323.24 crore on 30 August, according to the provisional data available on the NSE.

08:15 (IST) 31 Aug 2023 JFS to be removed from Sensex today

“Sensex is poised to exclude Jio Financials today, unless the stock triggers a lower circuit (upper limit not a concern). Jio’s 1.1% weight in Sensex 30 Index means passive selling may involve around 60 million shares, equivalent to roughly USD 180 million. Should exclusion be deferred, the exchange will announce during market hours.”

– Nuvama Institutional Equities

08:13 (IST) 31 Aug 2023 F&O ban

The National Stock Exchange has Indiabulls Housing Finance and BHEL securities on its F&O ban list for 31 August.

08:00 (IST) 31 Aug 2023 Crude oil

Global oil prices were up in early trade on Thursday backed by tighter U.S. supply, with a focus on China factory activity due later in the day amid recent weak economic expansion data in the world’s second-biggest economy.

07:59 (IST) 31 Aug 2023 Currency outlook

“US Dollar and 10Y UST yields drops on downbeat US ADP Employment Change, revised down US Q2 GDP favor Fed policy pivot bias. German Harmonised Index of Consumer Prices beats estimates, bolstering the Euro as well. For USDINR, 82.45/50 acts as a support while 82.85 a resistance.”

– Kunal Sodhani, Vice President, Shinhan Bank.

07:57 (IST) 31 Aug 2023 Wall Street overnight

The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signalled a cooling U.S. economy, reinforcing expectations the Federal Reserve will pause rate hikes in September, according to Reuters. On Wednesday, the Dow Jones Industrial Average went up by 0.11%, the S&P 500 advanced by 0.38%, and the Nasdaq Composite climbed by 0.54%.

Closing Bell: Nifty closes above 19340, Sensex above 65070; JFS, UPL and Hindalco among top gainers

Market Closing Bell: It is a rangebound Tuesday for the markets with the broader indices oscillating in a tight range. The Nifty shut shop in the green at 19,341.4, up 0.18% and the Sensex ended trade at 65,075.82, up 0.12%. Realty, metal and power stocks were in the limelight in today’s session with the Nifty Realty Index clocking over 1% gains.

The top gainers included UPL, Hindalco Industries, Adani Ports, Hero MotoCorp and Tata Steel while the top losers for the day included Bharti Airtel, HUL, Axis Bank, Dr Reddy’s Laboratories and Reliance Industries. The street seemed disappointed about the absence of clear timelines regarding the telecom and retail IPOs.

Hero MotoCorp rolls out Karizma XMR 210 at Rs 1.7 lakh. The stock ended the session with a robust 2% gains. Tata Motors’ electric arm, Tata Passenger Electric Mobility launched a new brand identity, the stock ended in green too.

Sectoral indices benefit from festival demand

“The buoyancy of the global market in anticipation of no further Fed rate hikes, due to subdued economic data, was noticeable in the Indian market as well. However, heavyweight stocks were muted compared to the sector-wise and mid & small-cap upsides. For instance, the chemical sector emerged as a clear winner due to improvements in product prices stemming from stability in the demand and supply scenario. Meanwhile, the metals sector rallied in anticipation of further green shoots from the Chinese government and central banks, aimed at improving the local economy. The benefits from festival demand were evident in sectors such as consumer durables, manufacturing, power, and real estate,” said Vinod Nair, Head of Research at Geojit Financial Services.

Nifty Realty may see buying traction

“The Nifty Realty index has seen a strong up move in the current financial year but since the start of August month, it has undergone some profit booking/correction. The index has been hovering near the 20 DEMA for quite sometime and with today’s price development, we could witness some buying traction. On the levels front, 530-525 is likely to cushion any short-term blip. On the flip side, the 52-week high of 568 – 570 is expected to provide a sturdy hurdle in the comparable period, “said Osho Krishan, Sr. Analyst – Technical & Derivative Research, Angel One.

Bank Nifty faces resistance at 44,650

“The Bank Nifty index remains engaged in a struggle between bulls and bears, resulting in a phase of sideways trading. The option data reflects a broad range, with notable open interest concentrations at both the 44,000 put option and the 45,000 call option. In terms of immediate technical levels, the index faces a resistance obstacle at 44,650. A decisive breach above this level is anticipated to ignite a fresh upward movement, potentially steering the index towards the 45,000 mark,” said Rupak De, Senior Technical analyst at LKP Securities.

Stocks To Watch: Vedanta, Paytm, HDFC Bank, IOC, ONGC, GAIL, Coffee Day Enterprises, L&T, Bharat Electronics

Stocks in focus: GIFT Nifty traded 0.22% higher during Monday’s early trading session at 19,279, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex. The equity benchmarks closed in the red on Friday. Sensex tanked over 350 points to close at 64,886.51, while Nifty 50 slipped 0.62% to end trade at 19,265.80.

“The domestic market experienced another week of losses as investor sentiment was influenced by the Jackson Hole meeting outcome. Investors are eagerly awaiting insights from Fed officials to gauge the future prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid- and small-cap stocks demonstrated resilience and gained momentum,” said Vinod Nair, Head of Research at Geojit Financial Services.

Coffee Day Enterprises

Coffee Day Global, which operates the Cafe Coffee Day (CCD) chain, has been given a temporary relief against bankruptcy proceedings initiated by lender IndusInd Bank last month. The Chennai bench of the National Company Law Tribunal halted admission of IndusInd Bank’s plea against Coffee Day Global by the NCLT Bengaluru, till September 20.

IOC, ONGC, GAIL

Stock exchanges have slapped fines on state-owned oil and gas firms including IOC, ONGC and GAIL for their failure to meet listing requirements of having a requisite number of independent directors and women directors. Gas utility GAIL was slapped Rs 2.71 lakh fine, Hindustan Petroleum Corporation Ltd (HPCL) Rs 3.59 lakh, Bharat Petroleum Corporation Ltd (BPCL) Rs 3.6 lakh, Oil India Ltd Rs 5.37 lakh and a fine of Rs 5.37 lakh was imposed on Mangalore Refinery and Petrochemicals Ltd (MRPL).

Bharat Electronics

Bharat Electronics won new defence and non-defence orders worth Rs 3,289 crore during July and August 2023. The orders include a Rs 1,075 crore order from Hindustan Shipyards for supply of CMS, communication systems, electronic warfare systems and other sensors for fleet support ships.

L&T

Shareholders of L&T approved a buyback of 3.33 crore shares for a consideration of Rs 10,000 crore, with a maximum price of Rs 3,000 per share on a proportionate basis through tender offer route through stock exchange mechanism. The maximum share price comes at a 13.98% premium to Friday’s closing price of Rs 2,632.00 apiece on the NSE.

HDFC Bank

The private lender has reappointed Sanmoy Chakrabarti as Chief Risk Officer. He will hold the position for five years with effect from 14 December, 2023

Paytm

Societe Generale and Morgan Stanley picked up a 1.57% stake in Paytm after Antfin Holding BV offloaded 2.27 crore shares in One97 Communications, the parent company of Paytm, through a block deal on Friday.

(With agency inputs.)

Will Nifty top 19500 or give up gains? See GIFT Nifty, FII data, F&O ban, crude, more before market opens

GIFT Nifty was flat during Thursday’s early trading session at 19,504.5, indicating a tepid opening for domestic indices NSE Nifty 50 and BSE Sensex. Domestic indices NSE Nifty and BSE Sensex closed in the green on Wednesday after a day of volatile trade. The blue-chip Nifty 50 index settled above 19,400, breaching a key resistance level while Sensex added 200 points after erasing losses from the morning trade.

“Global markets have restrained from making significant moves as they await the outcome of the central bankers’ gathering at Jackson Hole scheduled for Friday. With the earnings season nearing its end, the heightened possibility of another rate hike in the US, along with the resultant increase in bond yields, are expected to keep the global market’s volatility high. On the domestic front, sentiments remained positive, backed by strong demand in the banking sector, though IT and pharma limited the gains,” said Vinod Nair, Head of Research at Geojit Financial Services.

Asian Markets

Asian shares rallied on Thursday after blockbuster results from tech darling Nvidia boosted Wall Street and a retreat in U.S. bond yields eased pressure on borrowing costs globally. Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7%. China’s blue-chip CSI300 index was 0.51% higher in early trade. Hong Kong’s Hang Seng index opened up 0.82%.

Crude Oil

Oil prices slipped in early Asian trade on Thursday as weak manufacturing data in major economies outweighed optimism around a larger-than-expected drop in U.S. crude stocks.

FII/DII Data

Foreign institutional investors (FII) bought shares worth net Rs 614.32 crore, while domestic institutional investors (DII) bought shares worth net Rs 125.03 crore on 23 August, according to the provisional data available on the NSE.

F&O Ban

The National Stock Exchange has Sun TV, Manappuram Finance, PNB, India Cements, Hindustan Copper, GNFC, BHEL, Delta Corp, Escorts Kubota and Indiabulls Housing Finance securities on its F&O ban list for 24 August. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.

Bank Nifty Outlook

“Bank Nifty has witnessed a sharp pullback. On account of the rise it is now very close to the 44,600 – 44,700 where resistance in the form of the 20 and 40-day moving averages are placed which are likely to restrict a further sharp up-move. Bank Nifty is in a pullback mode which is also supported by the positive crossover on the daily momentum indicator,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

Technical View

“The Nifty continues to trade within the broader range of 19,300 and 19,500. On the daily timeframe, the headline Nifty index has been fluctuating between the boundaries set by the 21-day Exponential Moving Average (EMA) at 19,471 and the 50-day EMA at 19,281. Looking ahead, the Nifty is likely to maintain this range bound movement as long as it remains within these established thresholds. A significant breakthrough above the 19,500 mark could potentially trigger a rally towards higher levels,” Rupak De, Senior Technical analyst at LKP Securities said.

Rupee declines by 8 paise on rebound in crude oil, greenback

The rupee declined by 8 paise to settle at 82.71 (provisional) against the US currency on Tuesday due to a rebound in crude oil prices and greenback in the global markets.

Foreign fund outflows from the equity markets also weighed on the rupee sentiment, forex dealers said.

Volatile equity markets and recovery in crude oil prices during the day hit the rupee sentiment, dragging the unit to a day’s low of 82.73.

The rupee settled lower by 8 paise at 82.71 against the US dollar. On Monday, the rupee edged up by 1 paisa to settle at 82.63.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent higher at 104.07.

Brent crude futures, the global oil benchmark, rose 0.60 per cent to USD 84.93 per barrel.

On the domestic equity market front, the BSE Sensex closed higher by 79.22 points at 65,075.82 while the broader Nifty advanced by 36.60 points to close at 19,342.65.

Foreign Institutional Investors (FIIs) were net sellers in capital markets on Monday as they offloaded shares worth Rs ,393.25 crore, according to exchange data.

Pound plunges on lower UK CPI, dollar recovers from losses; traders eye ECB policy

By Gaurang Somaiya

Rupee continued to trade in a narrow range and volatility remained low even as a number of events unfolded on the domestic as well as on the global front. On the domestic front, India trade balance number was released and data showed the trade deficit narrowed $20.13 billion in June as compared to $22.12 billion in the previous month that was supportive of the rupee. Momentum for the currency was lacking even after a mixed set of economic data impacted the dollar. Data showed GDP grew at 6.3% in Q2 as compared to 4.5% in the previous quarter.

Global Currencies

The dollar recovered from its recent lows after falling below the 100 mark in the previous week. But this week, market participants will be importantly keeping an eye on the FOMC policy statement. Expectation is that the central bank will be raising rates by 25bps after taking a pause at its last meeting. Latest data of inflation suggest that the price rise has been lower and that is capping gains for the greenback. 

The rate hike in July could be termed as a “hawkish pause”. Some of the Fed members also expect that the rate hike from here on could be limited following risk of more bank failures and also on back of global economic uncertainty. This week, apart from the FOMC policy statement from the US, market participants will be keeping an eye on the preliminary manufacturing and services PMI, trade balance, advance GDP and core PCE index number. We expect that weaker-than-expected economic data could limit gains for the dollar.

Euro and pound witnessed quite a bit of choppiness especially the pound that plunged after gaining for two successive weeks. The pound plunged against the US dollar after inflation in the UK came in lower in June as compared to the previous month. Data showed inflation grew at a slower pace in June at 7.9% as compared to 8.7% in the previous month. The UK has been struggling with higher inflation and the Bank of England has raised rates similar to what the Fed did.

This week, from the EZ and the UK, market participants will be keeping an eye on the preliminary manufacturing and services PMI number. Focus will also be on the ECB policy statement; expectation is that the central bank could raise rates by 25bps as inflation is far from the central bank’s target of 2%. Communication for the next meeting will be importantly watched as that will guide the move for the euro in the next couple of weeks. We expect weakness in the pound to extend this week but the Euro, on the other hand, could trade sideways.

(Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Closing Bell: Nifty closes above 19300, Sensex under 65k; Reliance Industries, JFS end lower following AGM

Market Closing Bell: Domestic equity indices NSE Nifty 50 and BSE Sensex closed in the green on Monday, as traders celebrated the US Federal Reserve Chairman’s less hawkish stance and new measures by the Chinese authorities to support the markets. Nifty 50 closed at 19,306.05, while Sensex closed the trading session at 64,996.60, giving up the 65,000 level. The broader markets settled largely in the green, with Nifty Midcap 100 and Nifty Smallcap 100 adding 0.5% and 0.74%. Sectorally, all indices save for Nifty FMCG, Nifty IT and Nifty Oil & Gas gained. Bank Nifty rose 0.6%, while Nifty Pharma, Nifty Realty and Nifty PSU Bank clocked the highest gains.

Technical Outlook

“Technically, although Nifty cleared the intraday resistance of 19350, it failed to close above the same due to profit booking at higher levels. The index has formed a double bottom formation near the important support level, indicating strong possibility of a pullback rally from the current levels. For day traders, as long as the index is holding 19220, the positive sentiment is likely to continue, above which, the pullback rally till 19400-19450. On the other side, below 19220, the selling pressure is likely to accelerate, and below the same the index could slip till 19150-19120,” said Shrikant Chouhan, Head of Research (Retail), Kotak Securities.

RIL AGM

Reliance Industries Limited (RIL) has begun its 46th Annual General Meeting 2023 on Monday. While addressing the shareholders, RIL Chairman Mukesh Ambani said that Reliance Industries has cumulatively invested more than $150 billion in the last 10 years. Further, he added that RIL has also set new records in creating employment and has added 2.6 lakh jobs in FY23. Reliance, at the event, also announced that its Jio AirFiber will be launched on the occasion of Ganesh Chaturthi on September 19. Further, talking about Reliance Retail, Mukesh Ambani said that the valuation of Reliance Retail has almost doubled in less than 3 years, notwithstanding the intervening Covid-19 pandemic. The share price of Reliance Industries ended 1.27% lower at Rs 2,436.95, while Jio Financial Services gave up over 2% to settle at Rs 210.10 apiece.

USD-INR may consolidate within 81.70- 82.75, expect bargain buying near lower band; BoE, ECB eyed for cues

BY Dilip Parmar

The Indian rupee notched the best week since 3 March following the weaker greenback and risk-on sentiments. All Asian currencies gained against the US dollar in the week gone. However, the rupee underperforms among the region on weekly as well as month to date amid higher dollar demand from importers.

Short-term Outlook

Spot USDINR formed the Bullish Engulfing pattern on Friday, representing a change of sentiments. The pair has closed below 200 DMA but it has remained within 2 standard deviations of 20 DMA since February. We expect the pair to further consolidate between 81.70 to 82.75 and expect bargain buying near the lower band.

The ICE Dollar index registered its worst week in eight months following a fall in US yield after a surprise drop in monthly core inflation, the lowest since 2021, which led traders to abandon their previous idea that there might be two more rate increases still to come. The dollar fell and everything else climbed. The Japanese Yen and Euro gained the most against the US dollar among the major currencies. Elsewhere, a gauge of EM currencies saw its best week since January. Oil notched its third weekly advance, but fell on Friday as traders locked in profits and the commodity’s 200 DMA again provided a barrier to further advances.

As per the CFTC data, the flow was mixed during the week in the FX. Speculators sold Euro, Swiss franc and Australian dollar while gone for a long pound. However, they held a net short dollar position on aggregate of $12.5 billion.

What to Watch

China’s economy will be front and centre in the week ahead, starting with the People’s Bank of China setting its one-year rate on Monday. Later that day second-quarter GDP and June activity data. The UK and EU inflation report due Wednesday is set to be the week’s main event as it will help traders and investors fine-tune their bets on how far the Bank of England and ECB will raise interest rates after a strong repricing over the past week.

(Dilip Parmar is a Research Analyst at HDFC Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

RIL stock outlook: Analysts bet on company’s new age technologies focus

RIL stock is trading lower though the company reiterated aggressive growth plans across various business verticals and unveiled plans on new energy front at the AGM on August 28. While the street seemed disappointed about the absence of clear timelines regarding the telecom and retail IPOs, RIL plans to setup a battery giga factory by 2026 with its first CBG plant commissioned in Uttar Pradesh. The retail segment will focus on rapid store expansion and brand partnership/acquisitions to accelerate growth.

For the longer term, however, market analysts believe that the focus on new age technologies might be useful. Swarnendu Bhushan – Co-Head of Research, Prabhudas Lilladher highlights the continued emphasis on new age technologies by RIL, “We believe RIL provides a good investment opportunity given 1) its transition towards new age technologies and 2) cash flow for growth serviced from traditional refining and petrochemical segment. The company is trading at 12.8x FY24 consolidated EV/EBITDA and 22.7x FY24 consolidated PE. We estimate consolidated EPS CAGR of 10.7% for FY23-FY25E and value Refining and petrochemical segment at 7.5x FY25 EV/EBITDA, Digital services at 15x FY25 EV/EBITDA and Retail at 37x FY25 EV/EBITDA. Key risks are project execution and technology risk in new energy.”

According to JM Financial analysis, “The company reiterated its plan to transition its O2C business into a sustainable, green, circular and consumer integrated chemicals and materials business. It also restated its New Energy business roadmap and its Rs 75000 crore capex commitment and announced its foray into wind power generation. We maintain BUY on RIL (TP of Rs 2,900/share) as we believe net debt concerns are overdone, and also because RIL has industry leading capabilities across businesses to drive robust 14-15% EPS CAGR over the next 3-5 years.”

India’s forex reserves jump above $600 billion; Spot USDINR to hover between Rs 82.30 and Rs 81.70

By Dilip Parmar

The Indian rupee appreciated for the second week in a row following dollar inflows. Local units remained the second best-performing currency among Asian baskets. In the week preceding, foreign institutions bought $1.2bn equities and $184mn debts while the rupee gained a quarter percent to 81.96 a dollar.

Outlook:

This week will be of high drama as we have 3 major central bank monetary policy decisions which could bring volatility back to the forex markets. Spot USDINR is expected to oscillate between Rs 82.30 and Rs 81.70.   

The ICE dollar index gained the most in 10 weeks amid a short-covering rally ahead of the Fed meeting. The yen tumbled more than 2% to 141.73 a dollar, on speculation the Bank of Japan won’t change its yield curve control program at this week’s policy meeting. Elsewhere, crude oil headed for a fourth weekly gain amid tentative signs of global market tightening.

Though the greenback trend remains bearish, short covering rallies may continue this week in anticipation of hawkish Fed and month-end adjustment. The ICE dollar index has support at 99.50 and resistance at 102.70.

CFTC Position

CFTC data for the week through July 18th reflect a significant deterioration in dollar sentiment. Speculative Accounts’ overall positioning against the dollar versus the major currencies reflected an aggregate short position of $19.9bn in the latest week. The week-over-week increase in aggregate dollar shorts of $7.4bn was the largest single-week positioning shift against the dollar since 2020.

What to Watch:

 All eyes will be on the Big 3 major central banks’ policy decisions. The Federal Reserve and European Central Bank are each expected to raise interest rates by 25 basis points. However, the most focus will be on policymakers’ signaling whether more hikes are likely or if they plan an extended pause. The Bank of Japan remains the outlier, with Governor Kazuo Ueda expected to continue pumping even as inflation remains above its 2% target.

(Dilip Parmar, Research Analyst, HDFC Securities Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)