Page 8 - Value Plus Jan 2016

2016 CMP: ` 66.30 - 66.10 (As on 31st Dec, 2015)
ANOTHER
OUTSTANDING Buy on decline : ` 66.30 - 66.10
YEAR EXPECTED
FOR US DOLLAR Target Price : ` 67.65 - 68.20

We recommend buying Stop-Loss: < ` 65.70
in USD-INR December
contract at Rs 66.30 – 66.10 The US dollar (USD) bull trend remains well-
for the target of entrenched. The USD will regain renewed impetus
Rs 67.65 -68.20 with strict in the year ahead, fuelled by growth and interest rate
stop loss below Rs 65.70. differentials. In addition, the USD will benefit from
the structural liquidity premium provided by deep
equity and debt securities. Many market participants
are already heavily invested in the USD-strengthening
trade. The USD is poised to resume an appreciating
trend against most “core” currencies supported by
growth and interest rate differentials.
The US economy is showing moderate growth
averaging around 2¼% y-o-y. While the latest reports
have been somewhat mixed, consumer spending and
housing activity remain well supported by pent-up
demand, a robust job market, rising income gains,
solid household balance sheets, cheap gasoline prices
and low borrowing costs.
The Indian economy continues to gain momentum
gradually. Real GDP is expected to pick-up to 7.6%
y-o-y in 2016-17. India’s industrial sector, led by
manufacturing, is showing signs of improvement with
sentiment recuperating and output increasing by 4.7%
y-o-y in the third quarter, the fastest pace of expansion
since the second quarter of 2011. Inflation is expected
to pick up further in the coming months, though it
is likely to remain below the Reserve Bank of India’s
(RBI) 6% target (set for January 2016). Monetary
conditions will likely remain accommodative for the
foreseeable future.
For this month also, we recommend to stay firm on
our last month’s USD-INR buying outlook. There
was some volatility witnessed in intraday charts of
USD-INR prices. But, USD-INR long term chart is still
looking in a smooth uptrend as indicated by ascending
trend channel pattern.

8 ARIHANT CAPITAL ¡ JANUARY 2016