The MCX-SX INR November futures opened on weaker note on the back of weakness in Indian stock markets, but dollar sales by some foreign banks helped contain the losses.
One-month offshore Non-Deliverable Forward dollar/rupee contracts were quoting at 48.17/37, weaker than
the onshore spot rate, indicating a bearish near-term outlook for the rupee.
Indian shares opened down around 3.6 percent in line with other Asian markets taking ques from the US markets, which closed in the red yesterday. FII’s have already sold a net $12.7 billion worth of Indian shares so far in 2008, after buying a record $17.4 billion last year.
Strength seen in dollar against other currencies also pressured rupee. Today market would closely watch the interest rate decision of European Central Bank and the Bank of England, which are expected to cut the rates.
This rate cut would be supportive for dollar. Moreover a widening current account deficit and a gloomy outlook for stocks will continue to weigh on the Indian rupee.
Further rate cuts by RBI cannot be ruled out to boost the economy amid weakness in crude oil prices and lower inflationary figures.
Spot Rupee could see resistance towards 48.20/48.40 levels now. While supports are around 47.20/47.30 zone. Break of crucial 46.70 could see rupee strengthening further towards 45.80/46 levels.
The MCX-SX active November contract registered a strong volume increase of around 29.70% over the previous session. The MCX-SX November contract closed towards 47.9525.
