The MCX-SX INR December futures closed stronger on the back of a sharp rise seen in Indian stock indices along with offshore selling of Rupee Forward Contracts. Huge Dollar selling in offshore markets added to Dollar selling pressure in the Spot market, which led Rupee to test recent 3 week lows.
A sharp rally in the domestic equity markets saw India’s main equity index to rise as high as 5% intra-day, raising expectations of some fresh foreign capital inflows in coming days. Recent liquidity measures taken by the RBI on Weekend has also supported towards easing financial sentiment.
The central bank slashed its key interest rates by 1 percentage point on previous weekend and the government detailed a stimulus plan to boost growth and facilitate liquidity. The reverse repo rate (rate at which the central bank absorbs excess cash from the system) was also reduced to 5.0 percent from 6.0 percent.
Key interest rates in the country could continue to ease in the coming time, due to the softening of inflation. However due to possibility of election in the coming year, the authorities might not become as hawkish as one can expect it to be in Non-election years.
One-month offshore non-deliverable forward contracts were quoting at 49.15/30,stonger than previous weeks quote around 49.47/62, indicating strength in the short term MCX-SX INR December’08 futures prices have strengthened as expected earlier and closed towards 49.13.
MCX-SX INR December’08 futures prices holds supports between 48.50/48.60 followed by 47.90/48.00. Resistances are still intact between 50.00/50.15 followed by an important 50.70/50.80 range. MCX-SX INR January’09 futures closed towards 49.2800 and registered an increase in volume by 91.63%. The MCX-SX INR January’09 futures printed an open interest of 14658.
Spot rupee Supports between 49.20/49.30 has been broken. Immediate supports are now between 48.50/70 (being the rising trend line as seen in the chart) followed by physiological level of 48.00. Resistances are around 49.50 followed by 49.95/50.15 levels. MCX-SX INR futures registered a total volume of 1388Cr.
Active December contract registered volume increase of around 40.87% over the previous session.
