DAILY MARKET REPORT: Thursday - December 14, 2012

The Indian rupee opened at 54.46 levels after closing yesterday at 54.46 levels. The Intraday range for the rupee is seen between 54.35-54.70 levels.

The Indian rupee weakened on Thursday dragged by a late slide in the domestic stock market and a fall in the Euro. The WPI figures are due for the day, which give cues ahead of the RBI Monetary Policy next week

Even though the respective IPO's carried by both the public as well private sector are fetching good amount, the local markets and currency were seen weakening. The buying pressure is hampering the gains in rupee while the profit booking before the New Year is seen as a major reason behind the lackluster performance of the equities.

The Asian markets are trading mixed, tracking negative global equities on concerns that U.S. lawmakers are still too far apart to avert a fiscal crisis with an end-of-year deadline looming. Though US fiscal cliff should be averted any failure to avert the fiscal cliff could derail the struggling U.S. economic recovery and could again lead to a wide spread risk aversion sentiment across the global markets and increasing the demand for the safe haven.

The Federal Reserve's announcement of fresh liquidity measures sentiment failed to lift up the sentiments in shares and commodities markets. The investors are focused on the Fed's new approach of linking its policy to a drop in jobless rates, fearing that the Fed might withdraw its economic stimulus if the job market improved dramatically in the months to come.

The Indian Bond yield ended 2 bps lower at 8.16%as the market expected the central bank to launch another round of open market operation soon, to bridge a likely huge cash deficit after the advance tax outgo this week. The banking system's liquidity continued to show signs of strain on Thursday, as borrowings from the central bank's repo window crossed the comfort level of deficit, rising to 811.55 billion rupees ($14.89 billion).

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 it push further to around 53.50 levels. Importer cover close to 54.00 (Plan A) and below and also use strict stop loss of 54.55-60 (Plan B) to cover the unhedged exposures. Overall USD INR bullish target 55.00 again.

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

Friday, December 14, 2012