DAILY MARKET REPORT: Thursday - December 13, 2012

The Indian Rupee opened at 54.18 levels after closing yesterday at 54.31 levels. The Intraday range for the rupee is expected between 54.10-54.40 levels.

The index of industrial production (IIP) grew 8.2% annually in October well above the expectation of 4.5%. The high consumer price inflation remains at 9.9% in November. With inflation likely to stay above 7.5% in November, a rate cut is not expected in December. The Inflation figures are due on Friday.

India raised $1.1 billion selling a stake in miner NMDC Ltd for its efforts to control the widening fiscal deficit through sales of state assets. The government is expected to step up its divestment program in the months ahead. It has approved share sales in top power utility NTPC Ltd, explorer Oil India Ltd, MMTC Ltd and Bharat Heavy Electrical Ltd.

The Asian markets are trading higher after the U.S. Federal Reserve took new stimulus steps to bolster the economy and the yen feeling the pressure as expectations grow for more aggressive easing from the Japanese central bank next week.

The U.S. central bank, cut its forecasts for economic growth and inflation next year, committed to monthly purchases of $45 billion in Treasuries along with the $40 billion per month in mortgage-backed bonds it started buying in September. Bringing their total monthly purchases to $85 billion.

With its supply of short-term securities running low, the Fed will now simply buy long-term Treasury securities of about $45 billion per month. This should increase the Fed's balance sheet and thereby supply greater liquidity to capital markets.

Outlook: Uncovered Exporters wait till 54.80 to start covering partially . The 54.10 is still seen as a very crucial support, and rupee is seen holding above it. The breakout below 54.10 Levels and rupee sustaining below it for few sessions, would push it further to around 53.50 levels. Importer cover close to 54.00 (Plan A) and below and also use strict stop loss of 54.55 (Plan B) to cover the unhedged exposures. Overall USD INR bullish target 55.00 again.

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