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Pre Session Commentary
Indian Rupee: Likely To Track Local Equites
04-May-21   09:09 Hrs IST

Rising COVID-19 cases in the country that could hamper the country's growth outlook continues to weigh on the Indian rupee although upbeat macro data is seen supporting the unit. The daily COVID-19 cases in India showed a slight dip with 3,68,147 new coronavirus infections being reported in a day, taking the total tally of cases to 1,99,25,604, according to the Union Health Ministry data updated on Monday.

On Monday, rupee rose by 14 paise to close a nearly one-month high of 73.95 against the US dollar The rupee had opened lower at 74.25 and hit the day's low of 74.33. The local unit, however, pared its losses in afternoon trade on the back of dollar sale by exporters, positive manufacturing data and a recovery in stock indices. The rupee touched a high of 73.90 before closing at 73.95, the highest closing level since April 6.

The domestic 30-share Sensex staged a strong recovery in late trade and ended with small losses after a volatile session on Monday. The Nifty ended almost flat near the 14,650 level after opening below the 14,500 mark. Mounting COVID-19 cases continued in the country and a negative trend in Asian equities capped gains. The barometer index, the S&P BSE Sensex, fell 63.84 points or 0.13% to 48,718.52. The Nifty 50 index rose 3.05 points or 0.02% to 14,634.15. Foreign portfolio investors (FPIs) sold shares worth Rs 2,289.46 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 552.92 crore in the Indian equity market on 3 May, provisional data showed.

Overseas, Asian stocks are trading mixed on Tuesday with major markets in Japan and China still closed for holidays. In US, the S&P 500 and the Dow indexes ended higher on Monday amid a largely upbeat earnings season, while the Nasdaq came under pressure from declines in some high-flying growth stocks, as the rotation into cyclical and “economy reopening” stocks continued. New York Governor Andrew Cuomo announced that most capacity restrictions will be lifted across New York, New Jersey and Connecticut, while 24-hour subway service will resume in New York City later this month.

The U.S. economy is doing better but is “not out of the woods yet,” Federal Reserve Chair Jerome Powell reportedly said on Monday in remarks that flagged an upcoming central bank study documenting the disproportionate blow suffered by the less educated and working parents during the coronavirus downturn.

Meanwhile, the dollar nursed losses on Tuesday after an unexpected slowdown in U.S. manufacturing growth prompted investors to trim bets that a booming U.S. economy could boost the greenback.

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