February 4, 2019

Daily Currency outlook

• PRODUCT 1

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Monthly Currency and
Thematic reports

Currency Action
Recommendation in the report
Currency pair Contract Action Price Target Stoploss Duration - -
US$INR February futures Buy 71.58 71.85 71.42 1 day
• PRODUCT 2
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Research Analysts
Amit Gupta
amit.gup@icicisecurities.com

Gaurav Shah
Gaurav.shah@icicisecurities.com
Forex and global equities
Spot Currency • The rupee extended losses on Friday during the Budget day as risk
Currency Close Pvs. Close % Change of fiscal slippage has weighed on the rupee. It is expected to open

CURRENCY OUTLOOK
US$INR 71.26 71.09 0.24 today with further losses tracking cues from overseas markets
Dollar index 95.58 95.58 0.00
• The dollar was unchanged on Friday as losses against the Euro
EUR-US$ 1.1456 1.1448 0.07
were offset by gains over JPY and GBP. US non farm payrolls for
GBP-US$ 1.3079 1.3109 -0.23
January were strong at 304000 jobs but manufacturing jobs were
US$-JPY 109.50 108.89 0.56
lower at 13000. Unemployment rate also increased to 4% while
AUD-US$ 0.7250 0.7273 -0.32
earnings growth was steady at 3.2%. The uncertainty around Brexit
US$-CHF 0.9956 0.9942 0.14
is weighing on Euro and GBP and risk sentiment and is, thus,
supporting the dollar

ICICI Securities – Retail Equity Research

Global Equity Indices
• Equity benchmark surged towards 10900 despite elevated volatility
Indices Close Pvs. Close % Change
amid the key event of interim Budget. The Nifty settled for the week
Dow Jones 25064 25000 0.26
at 10894, up 113 or 1%
Nasdaq 6876 6907 -0.45
FTSE 7020 6969 0.74 • Broader market underperformed as the Nifty midcap and small cap
DAX 11181 11173 0.07 dipped marginally by 0.1% and 0.3%, respectively
HangSang 27982 27931 0.18
Nikkei 20874 20788 0.41
SGX Nifty 10900 10912 -0.11

*Asian equity indices at 8.00 am

Source: Bloomberg, ICICI Direct Research
 Debt and FII activity

Benchmark yield • Sovereign treasury yields rose to 7.38% on Friday amid the Budget
Close Pvs. Close % Change announcement. Increased worries over fiscal slippage have weighed
India 10-yr 7.38 7.28 1.26
on domestic debt
US 10-yr 2.68 2.63 2.09 • US treasury yields rose on Friday tracking the decent January
Eur 10-yr 0.17 0.15 11.41 employment data. However, with increasing dovish comments from
UK 10-yr 1.25 1.22 2.38 Fed, a sharp rise in yields would be capped
JPY 10-yr -0.01 0.01 -340.00

Commodities • Gold was slightly lower on Friday as US yields jumped tracking

Close Pvs. Close % Change higher January employment data. However, gold would find support
Gold 1318 1321 -0.25 as reduced interest rate hike prospects would weigh on non-interest
paying assets

ICICI Securities – Retail Equity Research

Copper 277.3 278.5 -0.41
Brent 62.8 61.9 1.39 • Oil extended gains for a fourth consecutive session and is near
$63/bl, which has been hurdle since November 2018

FII Activity
• Foreign institutional investors (FII) were net buyers to the tune of
Segment Purchase Sell Net | crores
| 2659 crore on January 31, 2019
Equity 10925 8169 2756
Debt 552 648 -97 • FIIs have been net sellers of the more than | 3105 crore in January
2019

Source: Bloomberg, ICICI Direct Research, CDSL

INR futures and Outlook

Currency futures on NSE

(%) change • The dollar-rupee February contract on the NSE was at
Contracts LTP chng (%) OI Vol 71.46 in the previous session. February contract open
OI Vol
February 71.46 0.23 1465204 2499378 3.07 23.11
interest increased 3.07% in the previous session
March 71.68 0.22 373909 314410 -2.97 109.83 •• cWe expect the US$INR to find supports at lower levels.
Feb -Mar -0.22 - - 2184968 - 87.42 Utilise downsides in the pair to initiate long positions
Mar-Apr -0.28 - - 275394 - 87.59

Pivot levels US$INR Strategy

ICICI Securities – Retail Equity Research

Futures Pivot S1 S2 R1 R2 US$INR February futures contract (NSE)
US$INR (Feb) 71.38 71.19 70.92 71.65 71.84 Buy US$ in the range of 71.55 -71.61 Market Lot: US$1000
US$INR (Mar) 71.61 71.42 71.16 71.87 72.05 Target: 71.80 / 71.90 Stop Loss: 71.42
EURINR (Feb) 81.96 81.73 81.34 82.34 82.57 Support Resistance
EURINR (Mar) 82.38 82.16 81.79 82.75 82.97
S1/ S2: 71.45 / 71.35 R1/R2:71.75 /71.85
GBPINR (Feb) 93.53 93.21 92.99 93.75 94.07 *Recommendation initiation message shall be broadcasted on iclick2gain at relevant prices
GBPINR (Mar) 93.95 93.63 93.42 94.16 94.47
JPYINR (Feb) 65.65 65.51 65.31 65.86 66.00
JPYINR (Mar) 65.98 65.84 65.64 66.18 66.32

Source: Bloomberg, ICICI Direct Research

US$INR Spot currency

US$INR Spot

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Strategy Update
Date Currency pair Strategy Rec. Target SL (P/L)* Comment
1-Feb-19 US$INR Sell future 71.18 71.04 71.29 -110 Exit in loss

Source: Bloomberg, ICICI Direct Research

Open Recommendations

Date Currency Product Strategy Recommendation price Target Stoploss Time frame
- - - - - - - -

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ICICI Securities – Retail Equity Research

Source: Bloomberg, ICICI Direct Research
Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Securities – Retail Equity Research

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

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Mumbai – 400 093

research@icicidirect.com
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