Daily Market Report: Monday - November 26, 2012

The Indian Rupee opened at 55.45 levels after closing at 55.53 levels on Friday. The Intraday range for the rupee is seen between 55.10 - 55.65 levels.

The Indian stock markets have remain attractive for overseas investors, as foreign entities have pumped in over USD 19 billion so far. This is the second highest net inflow by FIIs in a single calendar year from their entry into Indian capital markets in 1992. In 2010, overseas investors had made net investments of about USD 29 billion.

The winter session of parliament, as expected, opened with retail FDI being opposed by opposition parties. The logjam is expected to continue for some time. Unless the government is able to convince its allies and some fringe parties, the FDI vote could shake investor confidence. An all-party meeting on Monday should provide further clues.

The Asian markets are trading positive as South Korean consumer confidence increased and on the hope Greece can avoid a near-term bankruptcy, with Euro-zone finance ministers meeting later in the day.

The Global equity markets closed higher week on week on the back of expectations that the US Fiscal Cliff will be averted. Equities were also helped by positive China manufacturing data and with positive German business confidence data. The Separatists in Spain's Catalonia won regional elections on Sunday but failed to get the resounding mandate they need to push convincingly for a referendum on independence.

The 10 year Benchmark government bond, saw yields rising by 4bps week on week to close at the 8.23% level. The yield is likely to trend higher to levels of 8.30% on worries of higher borrowing and tightening liquidity conditions.

Outlook: Exporters sell close to 55.30 at least 30-40% for next 3 months or partially for longer term (8-12 months only) keeping a stop loss of 55 levels in case unable to cover at these levels. The rupee is still expected to be weak with some dips in between. Uncovered Importers are still recommended to cover on dips close to 54.50-54.80 levels. Overall USD/INR pair remains in a bullish trend. Rupee is weakening despite dollar getting weak against overseas.

EUR/USD: The EUR/USD is currently trading at 1.2955 levels. The Euro is trading higher against the US dollar and is nearing the key level of 1.2900 levels now. It is moving higher on expectations that international lenders will soon agree an aid deal for Greece. The Euro group leaders will once again meet today to discuss about Greece bailout. Germany's Chancellor stating a deal is possible without write-downs also supported the Euro. The Euro was also helped by positive German Ifo business climate index which rose up 1.4 pts to 101.4 in Nov, reversing Oct's decline. Support is at 1.2898 levels, and the resistance is near 1.3000 levels.

GBP/USD: The Pound is trading at 1.6027 levels. The positive sentiments from Euro and better than expected UK mortgage approvals supported GBP. It rose up from 31.5k to 33.0k in Oct. Support is near 1.5977 levels and the resistance is near 1.6175 levels. Overall in a range with bearish bias.

USD/JPY: USD/JPY is weakening and currently trading at 82.34 levels. Near term support is at 81.55 levels and the near term resistance is at 83.20 levels. The yen is weakening towards 84-85 levels as expected.

AUD/USD: Australian dollar is trading at 1.0452 levels. The Australian dollar is trading stable amid hopes Euro zone finance ministers will agree to unlock more than ?30 billion in aid for Greece. The local economic calendars are empty today, and the main global events to watch will be the reconvened meeting of EU finance ministers to decide on Greek funding. Near term support is seen at 1.0402 levels while immediate resistance is at 1.0560 levels.

Gold: Gold is trading at $1748 levels. Gold eased 0.1% to $1,749.98 an ounce after rising above $1,750 for the first time in five weeks on Friday as a drop in the dollar. Near term support is at $1731 levels, whereas strong resistance can be seen near $1773 levels. Gold does not remain a buy above 1750 dollars.

Oil: WTI Crude is trading at $88.04 levels.. Support is at $87.38 levels, whereas strong resistance can be seen near the $89.22 level.

DI: Dollar index is trading unchanged at 80.30 levels. The US dollar index is around 0.6% weaker. The dollar index has been trading lower continuously since last few sessions against its majors on account of risk appetite in the market. We can also mark that the US 10 year treasury yields are stable at 1.68%. Strong near term support is seen near 78.90 levels and the resistance is at 81.80 levels. Overall the index is bullish.

(Source: Corporate Communications Team, India Forex Advisors Pvt. Ltd.)