A day after hitting its three-week high, the rupee weakened 13 paise against the US dollar on Friday, July 30, to settle at 74.42 (provisional), due to muted domestic equities, higher crude oil rates, and unabated foreign fund outflows. At the interbank foreign exchange market, the domestic unit registered high volatility as it opened at 74.30 against the dollar and registered an intra-day high of 74.27. It witnessed a low of 74.44 during the session. In an early trade session, the local unit inched two paise to 74.27 against the greenback.

The domestic unit snapped its two-day winning streak and settled at 74.42, down 13 paise over its previous close. On Thursday, July 29, the local unit settled at 74.29 against the American currency. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading unchanged at 91.86.

On July 29, the domestic currency strengthened to its highest level in more than three weeks against the greenback tracking the U.S. Federal Reserve’s dovish stance. Gains in domestic equities also contributed to the rise in rupee’s performance. Yesterday, the rupee touched 74.22-74.23 – its strongest mark since July 6.
 

Mr Amit Pabari, MD, CR Forex:

”Globally, the number of Americans filing new claims for unemployment benefits remained near 400k in the week despite good job openings and ample attempts by many businesses to add staff. That apart US economic growth in the Q2 advanced to 6.5% but remained below forecasts of 8.5% pushing dollar index below 92 region and raising concerns over their economic outlook. 

On the domestic front, rupee has been backed up only due to inflows on account of various IPO’s and stake sales. However, the activeness of the RBI downside along with the importer’s rush to cover the dollar shall keep the rupee under pressure.

Overall, for USDINR pair 74.20 remains crucial support to determine the way forward for the rupee. Till the time it trades above 74.20, any dips between 74.20-74.30 levels can be taken for buying, while for selling we suggest waiting for a bounce-back above 74.60-70 to cover near term exposures.”
 

On the domestic equity market front, the BSE Sensex ended 66.23 points or 0.13 per cent lower at 52,586.84, while the broader NSE Nifty slipped 15.40 points or 0.1 per cent to 15,763.05.

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:

”The week has been volatile for the traders, as benchmark indices corrected sharply after a muted opening. However, once again the Nifty/ Sensex witnessed support near 15500/ 51900 levels and reversed quickly. Among Sectors, the Metal index outperformed during the week and rallied over 9 percent, whereas profit booking was seen in private banks and Energy stocks.

On the sectoral front, the texture suggests Metal stocks would continue to outperform in the near term. Any short-term corrections would be used to add quality Metal stocks with the medium-term time horizon.”

According to exchange data, the foreign institutional investors were net sellers in the capital market on July 29 as they offloaded shares worth Rs 866.26 crore. Global oil benchmark Brent crude declined 0.25 per cent to $ 75.86 per barrel in futures trade.