Motilal Oswal: Rupee Sails Through Covid-19 Turmoil
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Motilal Oswal Report
In the last couple of months rupee has been consolidating in a broad range of 74 and 76 despite sharp gains in domestic and global equities.
One of the major reasons for the rupee appreciation has been the rush of flows into Indian equities. Fund inflow in the equity segment has been to the tune of $4.9 billion in the last three months and a few big corporates have raised dollars via stake sale.
Reliance being the major one has managed to raise over Rs 1 lakh crore by stake sale in Jio leading to a surge in rupee. If it's been flows that has lead the rupee higher.
The Reserve Bank of India on the other hand has been intervening consistently to restrict any major appreciation.
Latest RBI data suggest that foreign exchange reserves are at record levels of $516 billion and looking at the current trend it seems that RBI is in no mood to slow down the pace of dollar purchases.
Market participants are also keeping an eye on the ongoing tension between India and China as it could disturb the overall market sentiment in the short term.
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