India continues to grow well despite a high-interest rate policy.

The Indian Rupee strengthened in the past week amid robust economic data and sustained intervention in the foreign exchange market by the Reserve Bank of India (RBI). India's GDP grew by 7.3% in 2023, surpassing market expectations, indicating the resilience of the Indian economy to the tight monetary policy implemented by the RBI in the previous year. The robust economic growth has attracted significant foreign capital inflows into India's financial assets.

The inflation rate in India increased to 5.69% on a year-on-year basis in December, up from 5.55% in November. This four-month consecutive increase is attributed to a rise in food inflation, reaching 9.5%, driven by the impact of the El Niño phenomenon, leading to the lowest rainfall in five years and affecting agricultural production. Vegetable prices increased by 27.6%, pulses by 20.7%, while fruit prices rose by 11.1%. However, cooking oil prices decreased by 15%.

India's trade deficit narrowed to $19.8 billion in December, down from the $23.2 billion deficit in the previous year. This reduction is attributed to a significant increase in exports coupled with a decrease in imports. Authorities warn that increased transportation costs and extended delivery times may have a significant impact on imported goods prices.

Imports to India declined by 4.7% on a yearly basis, totaling $58.3 billion. Energy products remained the largest category, comprising 27% of total imports, followed by gems and jewelry at 14%, and machinery at 10%. China and the United States continue to be India's key trading partners.

Exports increased by 1% on a yearly basis, reaching $38.5 billion. India's exports were not significantly affected by the Red Sea crisis, which led to a more than 400% increase in shipping costs during this period. The majority of exports include gems and jewelry, minerals, and the fuel and energy group.

The yield on India's 10-year government bonds dropped to 7.15% in January, the lowest in nearly four months, driven by favorable economic developments. Additionally, JPMorgan included Indian debt securities in its revamped bond market index, attracting increased foreign inflows of approximately $2.2-3.0 trillion into India, resulting in a decline in government bond yields.

Techical analysis data (5H)

Resistance: 83.091, 83.131, 83.211

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 82.889 - 82.970 but cannot break the support at 82.970, you may set a TP at approximately 83.131 and SL at around 82.849 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 83.091 - 83.131, you may set a TP at approximately 83.211 and SL at around 82.889 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 83.091 - 83.131 but cannot break the resistance at 83.091, you may set a TP at approximately 82.889 and SL at around 83.211 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 82.889 - 82.970, you may set a TP at approximately 82.849 and SL at around 83.131 or according to your acceptable risk.

Pivot point January 16, 2024 04:02 PM. GMT+7