Geopolitical headwinds and strengthening energy costs pushed Brent crude up 2.04 percent to USD 100.30 per barrel, softening the rupee despite it briefly touching an early session high of 94.36. Pressure also mounted from a rebounding greenback, as the dollar index climbed 0.17 percent to 101.71 following steady rate decisions from the Bank of England and positive US jobs data. Domestically, the Sensex gained 33 points while the Nifty slipped by 52.95 points to 24,477.40. Substantial Foreign Institutional Investor purchases totaling Rs 14,974.68 crore on Thursday may help provide underlying support against further severe declines.
Key points
Rising crude oil costs and a stronger greenback are creating sustained downward pressure…: Rising crude oil costs and a stronger greenback are creating sustained downward pressure on the currency.
Substantial net equity purchases by foreign institutional investors are expected to provi…: Substantial net equity purchases by foreign institutional investors are expected to provide an underlying positive bias.
Unresolved international conflicts involving Ukraine, Russia, and the Middle East continu…: Unresolved international conflicts involving Ukraine, Russia, and the Middle East continue to cap potential market gains.
Sources checked by our analysis pipeline: 1
Forex traders said overnight gains in crude oil prices and a recovery in the US dollar weighed on the domestic unit.
At the interbank foreign exchange market the rupee opened at 94.50 against the US dollar, registering a fall of 9 paise from its previous close.
However, during initial trade, it recovered slightly to touch a high of 94.36 against the US dollar.
On Thursday, the rupee had settled at 94.41 against the American currency.
The Bank of England kept policy rates unchanged while US weekly unemployment claims were better than forecasts, said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
"We expect the Rupee to trade with a positive bias on strength in domestic markets and fresh FII inflows," Choudhary said, adding that tensions between Ukraine and Russia and attacks in the Middle East may cap sharp upside.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.71, higher by 0.17 per cent.
Brent crude, the global oil benchmark, was trading higher by 2.04 per cent at USD 100.30 per barrel…
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