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NEW DELHI: The 50-share Nifty index is expected to open lower on Tuesday tracking muted Asian markets, while investors will closely track movement of rupee against USD.
At 07:30 a.m., Nifty India stock futures in Singapore were trading 30 points lower at 5877, indicating a weak opening on the domestic market.
The partially convertible rupee closed at 58.15/16 per dollar after hitting a life low of 58.17. The currency fell 1.9 per cent from Friday's close of 57.06/07.
"The rupee is currently on a free fall breaching the head and shoulder pattern at 55.20 and the major reason that we foresee behind rupee depreciation is the rise in US treasury yield, which is leading to the unwinding of carry trade in USD/INR," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
"The unwinding moves are very brutal and fast that's what we are seeing in rupee. Going ahead, as long as the USD/INR is above 57.10, we expect the pair to move towards 58.00-60 in the near-term," he added.
The 50-share Nifty Index pared intraday losses and closed in the positive terrain led by gains in technology, oil & gas and FMCG stocks.
Technically, daily chart indicates that Nifty is hovering around the 50-SDMA from last two trading sessions i.e. 5888 levels which indicates caution.
Fibonacci retracement theory also indicates that Nifty has retraced the 50% of the entire previous rally (low-5477/high-6229). This indicates that it has a cluster supports in the range of 5850-5880 levels.
"Nifty is currently trading in the range of 5950 to 5850 i.e. 100 point range as it not giving any breakout or breakdown on either side," said Swati A. Hotkar, Technical Analyst at LKP Advisory.
"My sense is that we are going through a painful time-wise correction more than a price correction and at lower levels buying is likely to come in; though we are not able to very clearly break 5950 mark," she added.
Hotkar is of the view that the short term trend is cautious. I believe for the next couple of days, the range 5850-5950 will continue, she added.
Overnight, US stocks ended flat as investors preferred to book profit after recent rally even though Standard & Poor's revised U.S. sovereign credit outlook to stable from negative.
The credit rating agency had downgraded the United States to "AA+" from the top-rated "AAA" in the summer of 2011.
"While last week's employment report eased jitters that the Fed could cool the pace of its bond buying in the very near term, some investors still are preparing for the Fed to reduce its quantitative easing by the end of the year," Reuters reported.
The Dow Jones industrial average was down 9.53 points, or 0.06 per cent, at 15,238.59. The Standard & Poor's 500 Index slipped 0.57 point, or 0.03 per cent, at 1,642.81. The Nasdaq Composite Index was up 4.55 points, or 0.13 per cent, at 3,473.77.
Asian shares were trading mixed even though Standard & Poor's removed the near-term threat of another credit rating downgrade for the United States.
"Still, uncertainty over the timing of the Fed's eventual reduction of its massive bond-buying program, concerns over China's growth outlook and doubts about the sustainability of Wall Street's rally may cap share prices," said the Reuters report.
U.S. crude futures inched up 0.1 percent to $95.84 a barrel.
Japan's Nikkei 225 index was trading 0.06 per cent lower at 13,506 and Hong Kong's Hang Seng index was trading 0.08 per cent lower at 21,597.12. South Korea's Kospi index was trading 0.5 per cent lower at 1920.45.
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