Daily Market Report: Wednesday - November 21, 2012

The Indian Rupee opened at 55.12 levels after closing yesterday at 55.10 levels. The Intraday range for the rupee is seen between 55.00 -55.40 levels.

The government is considering a proposal to raise the ceiling on foreign investments in government and corporate bonds by $5 billion each as the country looks to increase vital capital flows.

The Asian market gained, as the U.S. home building rose to a four-year high, adding to signs the world's biggest economy is recovering.
The Fed Chairman Bernanke's speech added nothing fresh, repeating the warning that failing to halt the $600 billion "fiscal cliff" in expiring tax cuts and government spending reductions could lead to recession, and said worries over how budget negotiations will be resolved were already damaging growth.

The central bank is still leaning towards the possibility of more stimulus. There is a possibility of increasing asset purchases once Operation Twist expires at the end of this year.
The Euro zone finance ministers are still considering allowing Athens to buy back up to 40 billion Euros. Nothing was announced yesterday after the extensive discussion among the group members.

The US 10 year Treasury yield rose to 1.66% from 1.61% seen yesterday. The Indian 10-year bond yield rose 1 basis point to 8.20%, amid caution about a cash crunch, and ahead of the parliament session seen as a test of the government's resolve to stick with its fiscal and economic reforms.
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. 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.

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

Wednesday, November 21, 2012