Increasingly the noise suggests that US and China will reach
a deal to allay the trade war concerns. This is reflected in stock markets for
now. Next week IMF would release its global growth forecasts which is likely to
be revised lower again (it revised the forecasts lower in January 2019 last)
considering recent statements on growth by Laggard. PMI data released this week
has been less disappointing that what market would have expected last week,
which has perhaps helped in US and German yields bouncing resulting in less
talk of a global recession. Oil has moved higher on OPEC production cuts
(against US wishes and without Russian cooperation) and with global
growth concerns it is unlikely to sustain above 70 levels (Brent).
With a view of oil remaining below 70 there doesn’t seem to
be a visible risk to India’s current account. As compared to March 2019, Apr
has seen much lesser FPI flows but I would continue to expect one more round of
investments into India in April before May election results. Currently the more
interesting aspect of currency markets are near term forwards and not spot.
Given the high cash/tom levels it is speculated that RBI would have bought in
spot heavily from 68.50 to 69 and received cash tom to normalize the levels
from 2p to 0.85p now. INR fix is trading at +1p and USDINR 1m NDF is trading 7p
right. I would continue to expect 69.50-68.50 range for the next 10 days. For
the day,CMP 69.22, Range 69.43-69.00.
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