Mumbai: Expectations of continuous foreign investment into the domestic equity market will support the newfound strength in Rupee, analysts opined.
However, global cues such as US political situation along with global vaccination roll-out will play a determining role in Rupee’s further movement.
“Looking at the weakness in the dollar index and foreign fund inflows into Indian equity markets, Rupee expected to remain firm though it has come to important support levels near 73 mark,” said Devarsh Vakil- Deputy Head of Retail Research at HDFC Securities.
“We expect the rupee to remain rangebound this week and digest recent gains.”
Besides, hopes of positive corporate earning outlook will sustain foreign investors’ interest in the market.
In December, the FIIs invested around $8 billion in both equity and debt segment.
Consequently, the rupee continued to gain for the fifth successive week to close at 73.12 to a greenback.
“This week, on the domestic front no major economic data is expected to be released but more fund inflow by the FIIs will continue to keep the rupee gains elevated,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“For the week, the USDINR (Spot) pair is expected to trade with a lower bias and quote in the range of 72.70 and 73.50.”
According to Rahul Gupta, Head of Research-Currency at Emkay Global Financial Services: “The vaccine optimism will stay but next catalyst for the market is US Georgia runoffs, a Democratic sweep will mean expansionary Biden policy but if Republicans win then they would provide a check on policies.”
“So we expect 72.90-73 to act as a strong support zone, only a break of which will push the price towards 72.50 zone, while 73.50 will act as an immediate resistance.”
By Rohit Vaid