Daily Market Report 17 th Aug 15 Research Team IFA Global
Domestic and International Highlights Indian rupee opened at 65.11 after closing the previous session at 65.00 levels. The intra-day range is seen between 65.05-65.35 levels. Chinese Yuan to Move both ways, volatility likely China's move to weaken the yuan last week could head off further similar "adjustments", and the yuan is likely to move in both directions as the economy stabilizes, chief economist for the PBoC has said. He also clarified that the move to devalue yuan was in accordance with the state of the economy & doesn't imply that China is participating in currency war. Trade Deficit widens to $12.8 billion as exports drop With global demand not showing any signs of a pickup, India's merchandise exports contracted for the eighth month running in July, registering a 10.3% drop over last year. The trade deficit widened to $12.8 billion in July from $10.8 billion in June. Imports fell 10.3% to $35.95 billion while exports came in at $23.1 billion. In the April-July period, exports fell 15% over last year. India's exports were hurt because of a stronger currency, a problem that could worsen after the yuan devaluation. Oil imports were 35% lower in July over last year while non-oil imports were higher by 3.80%, suggesting improving domestic demand. FPIs take out Rs 800 cr from market in a fortnight Spooked by a possible derailment of key economic reforms, foreign investors have pulled out over Rs 800 crore from the Indian capital market in the last fortnight. Foreign portfolio investors (FPIs) may further suck out money due to weakness in the rupee. The net outflow by FPIs in equities stood at Rs 684 crore till August 13 while the same read Rs 143 crore for the debt market during the period, which works out to a net outflow of Rs 827 crore. Indian 10 Year Bond Yield Indian bond yields opened on a slightly higher side, as traders booked profit after last week's rally. The sudden depreciation in the rupee also weighed on the sentiments. Going forward, bond yields are likely to trade with positive bias as lower CPI & WPI inflation, amid falling commodity prices have risen the hopes for another rate cut. Intraday range may be 7.72%-7.77%.
USD/INR Daily Chart Source: Bloomberg Technical Outlook The USD/INR pair has given a weekly close above levels of 65.00 and is trading with a positive bias. Immediate resistance on the upside is at 65.50. Overall Outlook & Strategy Trend The USD/INR pair is approaching the crucial resistance of 65.30 which is the previous top and trendline resistance. Exporters are advised to partially cover at current levels of 65.25 and hold the remaining position with a stoploss of 65.00. (They are suggested to discuss their positions with their respective advisors). Importers are advised to cover on major dips around levels of 64.30 for the near term. (They are suggested to discuss their positions with their respective advisors). Short term range (7-15 days): 64.30-65.30 Medium term range (3-6 months): 64.00-66.00
Key Indices Benchmark Indices Closing Change % Change Sensex 27905.1-162.21-0.58 Nifty 8482-36.55-0.43 Hang Seng 23810.85-180.18-0.75 Nikkei 20620.26 100.81 0.49 Dow Jones 17477.4 69.15 0.40 Nasdaq 5048.235 14.677 0.29 Asian Currencies Singaporean Dollar Korean Won Phillipines Peso Indonesian Rupiah Indian Rupee Chinese Yuan Value (US $) % Change 1.4096-0.1915 1182.81-0.1885 46.279-0.2247 13865-0.5626 65.22-0.3258 6.395-0.0594 Dax 10985.14-29.49-0.27 Malaysian Ringgit 4.1065-0.6331 Thailand Baht 35.361-0.4101 FII Flows in India 8000 7000 6000 5000 4000 3000 2000 1000 0-1000 6923.62 6287.81 Debt ($ mn) Equity ($ mn) -47.33-90.58-75.63-142.80 14th Aug Aug month Year so far Source: Bloomberg
Glance at G7 EUR / USD The EUR/USD pair extended the bearish tone as the greenback continues to move higher on the wave of upbeat US macro data released on Friday which further reinforced Sept rate hike expectations. Support: 1.0920, Resistance: 1.1150, Outlook: Medium Term (1 to 3 Months): Slightly Bullish: 1.1220 Long term (6 months- 1 Year) Bearish: 1.0600 GBP / USD The GBP/USD pair broke above the 1.56 handle after weeks of consolidation. The pair will further take cues from the movement in US dollar index as the economic calendar remains light for the week. Support: 1.5565, Resistance: 1.5720, Outlook: Medium Term (1 to 3 Months): Slightly Bullish: 1.5900 Long term (6 months- 1 Year) Bearish: 1.5000 AUD / USD The Australian dollar kept losses against its American counterpart, with AUD/USD consolidating below 0.74 handle, as Chinese devaluation seems priced in the market now. Support: 0.7290, Resistance: 0.7450, Outlook: Medium Term (1 to 3 Months): Slightly Bullish: 0.7580 Long term (6 months- 1 Year) Bearish: 0.7180 USD/ JPY The USD/JPY pair zoomed towards the 124.50 levels in early morning, as the JPY bulls took a back seat following the release of disappointing Japan s preliminary figures for the second quarter which showed that that the economy contracted due to softer private demand, underscoring expectations of further policy support. Support: 123.50, Resistance: 125.20, Outlook: Medium Term (1 to 3 Months): Slightly Bullish: 128.00 Long term (6 months- 1 Year) Bullish: 135 Gold Gold held gains following the first weekly increase since June after China increased its bullion reserves. China revealed on Friday that it boosted holdings by 1.1% in July. The disclosure came about a month after the country ended six years of mystery surrounding its hoard, revealing a 57% jump in assets since 2009. Support: 1075.00, Resistance: 1130.00, Outlook: Medium Term (1 to 3 Months): Range Bound: 1080-1150 Long term (6 months- 1 Year) slightly bearish: 1044.00
Crude WTI Crude Oil prices fell to near six-year lows as Japan's economy contracted and producers in the United States added drilling rigs for a fourth straight week despite a recent rout in prices. Japan's economy, the second biggest in Asia and No.3 in the world, shrank in the second quarter from a year earlier, adding to fears that slowdowns in Asia's biggest economies will weigh on oil demand. Support: 40.00 Resistance: 43.90, Outlook: Medium Term (1 to 3 Months): Slightly Bearish: 38.50 Long Term (6 months- 1 Year) Range bound: 60.00-65.00 Dollar Index The weakness in the dollar index continued as carry trade unwinding took Euro as well as GBP to session high. Dollar continues to be undermined by the expectations that the FED would continue to keep the interest rates unchanged after the recent Chinese devaluation. Support: 96.10, Resistance: 97.60, Outlook: Medium Term (1 to 3 Months): Slightly Bearish: 96.00 Long term (6 months- 1 Year) Bullish: 100.00 Economic Calendar Date 10-Aug-Mon 11-Aug-Tue 11-Aug-Tue 12-Aug-Wed 12-Aug-Wed 13-Aug-Thu 13-Aug-Thu 14-Aug-Fri 14-Aug-Fri Description US Fed Member Lockhart Speaks Australia Business Confidence Germany Zew Economic Sentiment China Industrial Production UK Claimant Count Change US Retail Sales (m/m) US - Unemployment Claims Germany Prelim GDP (q/q) US PPI (m/m)
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