India Morning Report: The Question of the Rupee bottoming out

By all visible indicators of technicals, as can be seen in a shallow traded currency, the Rupee has bottomed out before hitting 63 levels after a sellfest/beatdown on Tuesday. There was no edition of the India Morning Report yesterday, but he essentials of the currency , awaiting selling pressure to find out sustainable levels, are that it will look for another step in its recovery after a potentially false decline in value since the Fed pronouncements in May.

Yet, we have noted that the Rupee seldom responds to Global up moves, like caused by the current global lowering of Oil price targets with any substantive moves without buyers in the currency. The Rupee thus will go back to 61 levels only from here. IF the Rupee does move back that brings blue chips and banks selling at value back in the limelight.

The equities moved north yesterday till they corrected mid-session and today’s move essentially will be another recovery towards 5950 levels and beyond though one is not sure that will just help F&O bulls unwind from sold puts to leave the September series wide open or bring back the bulls which is likely if the currency recovery gains steam in the afternoon. Crude has fallen further to 103 levels overnight and Brent is close to 106 levels as peace talks resume with Iran

Unfortunately without a catch up from banks esp the Private sector Banks, the return of buyers into the market is now more or less questionable and that is one of the two or three big waiting games developing in market circles.

Lupin’s new deal in the USA seems oto be a sales and marketing arrangement that adds directly to the topline. Its mainline US market drug Antara has just gone generic and the company seems happy it has recovered lost sales on that front

Discussions on the Tata Motors’ domestc valuation being recovered by JLR $12 Bln valuation escaped some of my notice ut overall, Telco has hardly shown any change despite the blatant push in sentiment by buyers. Tata Steel remains a much better buy for 2014. In commodities, Dr Copper follows Oil south on the charts as the return of China’s production led demand fails to rejuvenate the sentiment as expected by us.

1pm Update: However, India seems unhappy with a high VIX score of just 27 as of yesterday and is probably looking to correct the markets til a VIx of 36-40 at 5750 levels as banks DNR on the morning because of RBI consumer loan clampdown

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