Indian Rupee, USD/INR, Nifty 50, Covid Vaccine, Profit Taking, Thanksgiving – Talking Points
- Indian Rupee capitalized on weaker US Dollar, more gains ahead?
- Nifty 50 sinks on capital outflows ahead of Thanksgiving holiday
- USD/INR back in consolidation zone, Nifty at risk of a reversal?
The Indian Rupee continued to capitalize on the weaker haven-linked US Dollar seen as of late. Progress towards a Covid vaccine from Pfizer, Moderna and the AstraZeneca-Oxford team has bolstered general market sentiment. This is despite rising coronavirus cases in the United States with recent conference board consumer confidence and jobless claims data looking particularly worrying.
India’s benchmark stock index, the Nifty 50, tumbled 1.51% on Wednesday however. That was the worst day for the index in almost 6 weeks. This might have been due to some profit-taking ahead of the holiday-shortened week in the US due to Thanksgiving. It also follows strong gains in the index since early November that pushed it deeper into all-time highs.
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According to Bloomberg, domestic funds sold a net INR18.4 billion of stocks on Wednesday as global ones dumped about INR0.242 billion. Most of the losses were seen in financial stocks, the largest segment of the Nifty 50. Lower-than-normal levels of liquidity remain a risk in the short term with Indian third-quarter GDP on tap Friday. This risks amplifying volatility given a softer-than-expected outcome.
Indian Rupee Technical Analysis
USD/INR closed back under the former 73.89 – 74.04 resistance zone. That has exposed the key 72.76 – 73.00 support zone. Between these two technical boundaries is where the pair spent most of its time consolidating from September until late October. USD/INR also confirmed a break under short-term rising support from early October. Keep a close eye on the 50-day Simple Moving Average (SMA), which may hold a support.
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USD/INR Daily Chart
USD/INR Chart Created in TradingView
Nifty 50 Technical Analysis
The Nifty 50 closed under a short-term rising trendline from late October. This follows the emergence of negative RSI divergence, a sign of fading upside momentum. Confirmation of the breakout would likely place the focus on the 20-day SMA which may reinstate the focus to the upside. Otherwise, extending gains places the focus on the 138.2% Fibonacci extension at 13242 followed by the 150% level at 13388.
Nifty 50 Daily Chart
Nifty 50 Chart Created in TradingView
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
