On Tuesday, the Indian rupee settled 6 paise lower at 81.88 (provisional) against the US dollar as investors chose to remain on the sidelines ahead of the US Federal Reserve meeting outcome. The local currency opened on a positive note at 81.75, but pared early gains to settle lower against the US dollar despite a firm trend in domestic equities. The rupee consolidated in a narrow range, touching a high of 81.72 and a low of 81.95 against the American currency during the day. On Friday, the rupee had closed at 81.82 against the US currency, and the forex and equity markets were closed on Monday on account of Maharashtra Day.
Forex traders said that investors were waiting for cues from the US Federal Open Market Committee (FOMC) meeting that began later in the day. The market now awaits the FOMC outcome on May 3. The rupee weakened throughout the day as traders and hedgers bet on the dollar ahead of the FOMC policy decision. Dilip Parmar, a research analyst at HDFC Securities, said that spot USD/INR was expected to hold support at 81.50, the 200-day simple moving average, and resistance at 82.30. Parmar also noted that he expected a short covering rally in the near term before breaking the long-term support line.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.15 per cent to 102.30. Brent crude futures, the global oil benchmark, declined 0.55 per cent to USD 78.87 per barrel. In the domestic equity market, the 30-share BSE Sensex advanced 242.27 points or 0.40 per cent to close at 61,354.71. The broader NSE Nifty rose 82.65 points or 0.46 per cent to settle at 18,147.65. Foreign Institutional Investors (FIIs) were net buyers in the capital market on Friday as they purchased shares worth Rs 3,304.32 crore, according to exchange data.
On the domestic macroeconomic front, record Goods and Services Tax (GST) collections and a four-month high manufacturing Purchasing Managers’ Index (PMI) are aiding bullish sentiments. The GST collection in April rose by 12 per cent annually to over Rs 1.87 lakh crore, touching an all-time monthly high, according to finance ministry data released on Monday. Manufacturing activities in India accelerated further and touched a four-month high in April, with the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) increasing from 56.4 in March to 57.2 in April.
This week will be a holiday-shortened one as the market remains open only for three trade sessions. Investors will be keeping a close eye on global and domestic developments, including the FOMC outcome, for further cues on the movement of the rupee and other market indicators.
