INR opened today at 71.04 after closing yesterday at 70.01 against US Dollar.
Investors withdrew INR 828.49 crores on 24.09.2019 as per data published by National Stock Exchange. Total buying on Tuesday was reported at INR 5340.81 crores and selling reported at INR 6169.30 Crores
Strong US Dollar Index (DXY)
After closing at 98.31 on Tuesday US Dollar Index opened today at 98.50, up by 0.17%. Rupee will struggle to sustain against US Dollar due to strong DXY
Government’s Solution to Fiscal Deficit
Officials are set to meet this week to decide the borrowing plan until the end of financial year 31st of March 2020. Tax cut decision might have been beneficial to the corporate sector and equity market of India but has created a huge hole in the government funds. Government needs to find solution to fiscal deficit as soon as possible.
Volatile Market Situation
Reports in Europe and Japan of slowdown due to decline in trade also spread to global markets. Sensex closed flat at 39097.14 on Tuesday after hitting day high at 39215.67. Two day rally of NIFTY and SENSEX is set take a toll with global market sentiment turning negative due to fear of recession.
Crude Oil Falls by 2%
Crude oil prices fell by 2% on Tuesday after reports that Saudi Oil production has restored by almost 75% since the oil attacks. In addition, US oil production has increased and there are reports of new oil production in Norway and Brazil. According to experts, “crude oil market is over supplied”.
US-China Trade War Escalation
US President Donald Trump on Tuesday criticized China’s unfair trade practices at United Nations General Assembly further escalating trade war between the countries. “Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping technology transfers and the theft of intellectual property and also trade secrets on a grand scale,” Global market sentiment turned negative after comments by US President.
INR is set to trade between 70.80 – 71.05 today as per our forecast. We expect rupee to be stronger due to crude oil prices falling by 2% on Tuesday.