- Overseas traders are positive on India’s long-term prospects for growth and market performance on India’s U turn on Tax matters (MAT) which we think as conducive for corporates
- Short term concerns reflect over outside risks and the impact on external capital
- Retailers fear that international investors may lose tolerance with the domestic reform story
- Corporate and investor clients look ahead to mild INR depreciationTechnical watch:There have been spectacular speculation seen on intraday charts during the course of the day, however, rupee started signaling the strengths over Euro.Both on intraday and daily charts indicate the downswing rallies on EURINR currency cross with RSI (14) confirming the downside convergence with price curve. In addition to that fast stochastic oscillator signals overbought situations as redline crossover occurred above 80 levels.We could also figure out a shooting star pattern candle formed exactly on tops of uptrend which shows a shows trouble overhead, so some correction rallies are on.So, what else is required for reversal trend? We don’t think any further confirmation required to make an attempt of recovery in rupee over Euro.Hence, for regular traders we recommend selling either on spot rates around 71.60 with a stop loss of 71.7232 for a target of 71.4176 or short term traders can also look opportunities short on futures on every rise.Option Strategy: Bear Put SpreadsOn hedging front, we advocate buying a debit put spread on a short term basis.In order to execute this strategy, long an ATM Put option and short another OTM Put option at a lower strike price for a net debit.Use this position over a necked long put only when necked puts are overpriced or the underlying currency is expected to move marginally lower.
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