India: Fifth straight month of uptick seen in the WPI based inflation
|The Indian rupee made a gap up opening at 73.20 levels and traded in the range of 73.11-73.27 with an upside bias. The pair finally closed the day at 73.27 levels. The rupee fell to its lowest level in nearly two weeks against the US dollar in choppy trade because the dollar strengthens across all major currencies and a further rise in Brent crude oil prices prompted oil marketing companies to step up their demand for dollars. Higher crude oil price worsens the outlook on India's current account deficit since the value of imports rises, thereby dampening the sentiment for the domestic currency.
India’s CPI inflation accelerated to a six-month high print of 6.30% in May, breaching the upper band of the Reserve Bank of India's flexible inflation target. A Reuters poll estimated the CPI inflation rate to be 5.30% in May. Meanwhile, the wholesale price-based inflation, released earlier during the day, soared to a record high of 12.94% in May, on rising prices of crude oil and manufactured goods. This is the fifth straight month of uptick seen in the WPI based inflation.
Industrial output in the 19 countries of the bloc rose by 0.8% m-o-m. This beat analysts' estimate of a 0.4% increase. On an annualized basis, a premium on the one-year, exact-period dollar/rupee contract was at 4.60%, against the previous close of 4.52%. The RBI set the reference rate for USDINR at 73.18 levels. The 10-year G-Sec benchmark closed the day at 6.0044% levels while the overnight money market rate settled at 3.27% as against 3.26% recorded in the previous close.
USD/INR
The USDINR pair has closed the trading session at 73.27 levels. Immediate resistance to be around 73.45 levels which is 38% retracement of the last month fall from 75.32-72.32. On the flipside, the immediate support will be at the 72.49 levels.
Equity market
The Sensex index settled 0.15% higher at 52,552 while the Nifty50 index closed at 15,812, up by 0.08%. India's VIX index rose 4% on the NSE today, suggesting high volatility in the markets. In the broader markets, the BSE MidCap index ended the day in the red, down 0.7% while the BSE SmallCap index closed 0.2% lower. Sectorally, the Nifty PSU Bank index ended the day as the top gainer on the NSE, up 0.58%, while the Nifty Realty index closed as the worst performer, down by 1.52%.
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