Our Rupee has been weakening continuously against Dollar since June 2014, while it was trading around 60/USD. But still it has been trading in the strict upside channel, and importer and exporter could take support of the same and hedge their payments accordingly. Fundamentally, this has been the period where FII has sold heavily in Emerging markets including India, and all the currencies around the world had weakened against dollar, so we did too but we out performed though. Now after the investor friendly budget for starts up and many other sector, and valuation at cheapest in last 2 years, i feel FII would start pouring in some money. As India is the only emerging market, with growth of more than 7% at in such fragile times, am sure that FII would prefer India over other emerging markets. So may be Equity markets could remain volatile but as USD/INR charts suggest that Currency has resisted near to the channel line which is intact since 2 years, so one can surely take a risk to hedge. Even the time frame of the chart is Weekly, and if we closed below 68.30 on Friday, we can get “Evening star pattern” which is bullish reversal..But as indicators and channel suggest a sell, one shouldnt wait to hedge.
Strategy: Sell USD/INR March (CMP:68.64) Tgt: 66.80 SL: 69.30