Rupee may trade positive on inflow of foreign funds: Angel

Angel Broking's report on currency

The Indian Rupee trading session was closed in last two days on account of Gudi Padwa and Annual Banking closing holidays. The Indian Rupee appreciated around 1.7 percent in the last week on the back of sustained inflow of foreign funds into the equity markets. Further, inflow of dollars from custodian banks and yearend sales by exporters coupled with expectations that central bank will keep key rates unchanged in its meeting in next week supported an upside in the currency.

However, intervention of Reserve Bank of India (RBI) to buy dollars and increase its forex reserves capped sharp gains in the currency. Also, dollar demand from oil importers and its companies restricted positive movement in the currency. The currency touched a weekly high of 59.68 and closed at 59.88 on Friday.

For the month of April 2014, FII inflows totaled at Rs.20077.20 crores (USD 3296.80 million) as on 28th March 2014. Year to date basis, net capital inflows stood at Rs.22195.70 crores (USD 3650.40 million) as on 28th March 2014.

India’s HSBC Markit Manufacturing PMI dropped by 1.2 points to 51.3-mark in March from 52.5-level in February. Reserve Bank of India (RBI) maintained its repo and reserve repo rates at 8 percent and 7 percent respectively. Cash Reserve Ratio (CRR) was also kept unchanged at 4 percent.

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Outlook: From the intra-day perspective, we expect Indian Rupee to trade on a positive note on the back inflow of foreign funds in equity markets. Further, selling of dollars by exporters and custodian banks along with RBI keeping the interest rates unchanged in yesterday’s trade will act as a positive factor. Additionally, upbeat market sentiments coupled with weakness in the DX will continue with positive movement in the currency.

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